Viewpoints from Kaizen

Guide to Setting up Wholly Owned Foreign Enterprise in Shanghai, China Foreign enterprises can establish Wholly Owned Foreign Enterprises (WOFE) in Shanghai upon application and approval. Characteristics of a WOFE Wholly Owned Foreign Enterprise (WOFE), normally in the form of a limited liability company, the establishment of which is governed both by the Company Law of the People’s Republic of China (PRC) and Law of the PRC on Enterprises Operating Exclusively with Foreign Capital (“外資企業法”). A WOFE can engage itself in approved business activities and issue tax invoices on its own. It is a corporation and a tax resident. All shareholders of WOFE should not be Chinese nationals or China incorporated enterprises. In terms of company registration, Hong Kong and Macao residents and companies are not considered to be China nationals. Company Name The name of the WOFE is governed by “Regulations on the Management of name of Enterprises ” […]

Introduction to Foreign Invested Commercial Enterprise (FICE) With China’s WTO accession, further opening up to foreign investors, restrictions on certain foreign-invested trading projects have been gradually phased out. Chinese government issued “Measures for the Administration on Foreign Investment in Commercial Fields”, starting from 11 December 2004, foreign investors have been allowed to establish wholly foreign owned commercial enterprises (wholesaling and retailing WFOE) in the PRC. The term used for this type of company is Foreign Invested Commercial Enterprise or in short “FICE”, still mainly in the form of a Limited Liability Company. Greater discretion for foreign investors as WFOE can now freely purchase and sell domestically. The “Foreign Invested Commercial Enterprises” shall refer to the enterprises with foreign investment which undertake the following business activities: 1. Commission agency: selling agents, brokers, auctioneers or other wholesalers for goods, who sell goods of other people and provide relevant attaching services through collecting […]

Introduction to Foreign Invested Commercial Enterprise (FICE) From 1 December 2004, a new investment vehicle has been made available to foreign investors as the Chinese government is allowing and encouraging foreign investors to set up “Foreign Investment Commercial Enterprises” (FICEs) in China to conduct wholesale, retail and other permitted businesses. This type of business entity possesses the total right of trade and business. It can conduct import/export activities by itself, independent of the local import and export company and does not require the setting up of a manufacturing company. Furthermore, from 1 March 2006, FICEs are permitted by law to apply and obtain approval documents from the Shenzhen Bureau of Trade and Industry in the Shenzhen City, instead of from Ministry of Commerce in Beijing. The FICE is normally in the form of a Limited Liability Company wholly owned by one of more foreign investors (both foreign individuals and corporations). […]

Introduction This guide provides an overview of the matters relating to application of Beijing Green Card (officially named as Beijing Work & Residence Permit) for a non-Beijing citizen who works and lives in Beijing, China. The privileges enjoyed by the Permit holder, the requirements, the documents required, and other matters associated with such application are hereby presented as a reference for Kaizen’s current and potential clients. Privileges of the Beijing Green Card Holder No temporary schooling management fees will be charged for the holder’s children to go to nursery, primary and secondary school in Beijing; The Holder can purchase the commodity apartment, the approved for sale public house and stock house in in Beijing and the Holder can also buy the affordable housing according to related regulations; According to the regulated regulations of Public Security Department, the eligible holder can apply for exiting from the country on private business; The […]

1. Definition of VAT Value Added Tax (VAT) is levied on all units and individuals engaged in the sale of goods, the provision of processing, repairs and replacement services within China, or the importation of goods into the territory of China. 2. Tax Rates There are two types of taxpayers for VAT purpose: general taxpayers and small-scale taxpayers. For general taxpayers, the VAT is levied at 17% on the turnover of the sales of goods and the provision of processing and maintenance services. For small-scale taxpayers, with effect from 1 January 2009, VAT is levied at 3% on turnover derived. With effect from 1 January 2009, the threshold for application for registration as a general VAT payer is reduced from RMB1 million to RMB0.5 million for manufacturing taxpayers, and from RMB1.8 million to RMB0.8 million for commercial taxpayers. VAT tax rates vary according to the taxable activities / classification. The […]

As China’s strength in the global economy continues to grow, businesses need to consider the prospect of establishing operations within its borders. This article provides general information on establishing a subsidiary by foreign investors, to help provide guidance and demystify the process.   Purpose of Establishing a Subsidiary in China Establishing a subsidiary in China should be considered by those who have long-term business objectives in China. Although foreign companies can enter into some commercial contracts with Chinese enterprises, such as sales contracts, license agreements, and distribution agreements, they cannot do business directly in China without an approved business license. Doing business in China through a subsidiary is at least advantageous and sometimes a necessity in overcoming certain legal and business restrictions on foreign companies. Some foreign companies may already have a resident representative office in China. Such representative offices function as internal liaisons for their parent company. However, they […]

1. Introduction After thorough analysis and evaluation, you have come to the conclusion that a Representative Office in the Shenzhen Special Economic Zone, China, is the right move for your company in making the first presence in China. What to do next? The purpose of this article is to provide foreign investors with a general understanding of the procedures and materials required in setting up a Representative Office in Shenzhen, China. 2. Procedures to Setting up a Representative Office in Shenzhen The procedures for registration of a Permanent Representative Office in Shenzhen can be summarised into a three-step process: step 1 is the preparation of application materials, step 2 is the application for registration certificate and the last step is the post-registration procedures. (1) Step 1: Pre-registration Procedure (a) Designate a Chief Representative of the proposed Representative Office. The Chief Representative is the person who will be responsible for managing […]

Introduction This guide provides an overview of the matters relating to application of working visa / Z Visa (officially named as Alien Employment Permit and Residence Permit in China) for a foreigner who intends to work in Beijing, China. The requirements, procedures and other matters associated with such application are hereby presented as a reference for Kaizen’s current and potential clients. Application Procedures Step 1: Health Examination; Step 2: Apply for Alien Employment License; Step 3: Apply for Z Visa (working visa) Invitation Letter; Step 4: Apply for Z entry Visa; Step 5: Apply for Alien Employment Permit; Step 6: Apply for Residence Permit For Step 4, the foreign applicant needs to apply for a Z entry visa with Chinese Embassy or Consulate located in his/her resident country. Documents/Materials Required Business License of the Beijing employer company Duplicate (Original); Certificate of Approval of the Beijing employer company (original); One set […]

I. Tax registration Following the provisions stipulated by the Administration Law on Collection and Administration of Tax of PRC, the foreign-invested enterprises shall apply to the local tax authorities for tax registration against relevant documents with 30 days after the issuing of the business license. It shall also present the following documents according to the relevant stipulations: approval documents, the business license, contracts, articles of association, bank account number, legal person’s identification cards, passports and other legitimate documents, as well as other documents required by the taxation authorities. After the tax registration,’ the foreign-invested enterprises shall notify the original tax registration authorities if there is any change of registration items, and make a change of registration against the relevant documents within 30 days of from the date of the change occurs. In the case of termination of a foreign-invested enterprise by means of dissolution, bankruptcy and cancellation, etc., it shall […]

Currently in China the finance organization is in a pattern that state-owned commercial banks remaining dominate and diverse financial organizations developing side by side. The government is enforcing a system of individual administrations on individual industries such as banks, securities, insurance and trusting. The state is enforcing its financial supervision on the financial market through the monetary controlling measures of the Central Bank. RMB exchange rates are based on a fluctuation rate system that goes with market demand and supply, is unified and put under control. Strict management is still enforced upon RMB free exchange under current account and foreign exchange under capital account. A system of exchange, settlement and sales shall be observed in foreign exchange payment and a system of canceling after verification in payment of import and export. Foreign Exchange Registration Foreign invested enterprises shall take a copy of the Certificate of Approval of Foreign Invested Company […]