Shenzhen
is located on the western coast of the Pacific Ocean and at the central section
of the north-south coastline of China. Facing the opportunities and challenges
of the 21st century, Shenzhen has set its long-term strategic
objectives for social and economic development. In near future, Shenzhen is
planned to become one of the international economic, financial and trade
centers of the world.
As the
window of China's reform and opening up, Shenzhen is the first special economic
zone established by China's reform and opening-up policy. Shenzhen came in
second as the most economically competitive cities in the world in 2016.
Setting
up a company in Shenzhen is a good choice for companies that are in
computer software, IT, microelectronics and components, video and audio
products, electromechanical integration, and key projects of light industry and
energy.
Shenzhen
is the epicenter for electronic manufacturing services. Here, you can find
suppliers for everything from power banks to VR headsets. The ecosystem is also
very open. Even the smallest startup will find suppliers that are interested in
working with them. Shenzhen is no doubt the ideal place for electronic manufacturing
services, PCB design and prototyping, and electronic OEM projects.
As the
seven strategic emerging industries, the Internet, new materials, biology, new
energy, energy conservation and environmental protection, cultural creativity,
new generation of information technology and the four future industries i.e.
marine economy, aerospace, robot wearables and intelligent equipment and life
health are gaining momentum.
If you
want to move up the supply chain in ShenZhen, or shift your manufacturing to
ShenZhen China to reduce overall cost, registering a ShenZhen manufacturing
WFOE (wholly foreign owned enterprise) is the way to take it to the next level.
There are different WFOEs for different purposes, and in this case we’ll look
in detail at the ShenZhen manufacturing WFOE registration process...
Why you need a manufacturing WFOE
In the past, foreign companies aiming to manufacture their products in China would usually have to enter into a joint venture with a local company. This allows an easy route into China with a company which already has established infrastructure, and is still necessary for certain industries, such as Automotive and Pharmaceutical; but can lead to a loss of control, or disagreements with your local partner.A manufacturing WFOE allows you to set up your own manufacturing operations within China, but with no connection to local companies whatsoever. This offers increased business mobility, better protection of IP, and a level playing field with local companies (as your Chinese company is equal in terms of being able to trade in China).
It’s good to keep in mind that the company setup can only operate within the business scope approved by the authorities. China may provide incentives and tax breaks for foreign manufacturing companies, however, the rules and regulations are complex so professional guidance from a partner like TCBC is recommended.
How long does the Manufacturing WFOE Registration process take?
The exact duration of registering a manufacturing WFOE depends on several factors and the timeframes can differ, mainly due to a variety of certificates demanded by the Chinese government. These certificates include the Environment Safety Certificates, Energy Impact Assessment Approval and Fire Protection Approval, among others. Most companies quote 3-9 months, with the average time being around 8 months, but considering your paperwork is in order the process can be done much quicker with proper assistance. The good news is a lot of the process can be done via email and courier services, so you can start the process from wherever you are and travel to China once the process has been initiated.
There are 4 phases for registering a Manufacturing WFOE. If working with an agency, your account manager will guide you through each step, and make sure that your documents are correct:
Phase 1: Preliminary Project Application and Name Approval
The first thing you need to do is make sure your proposed company name is available, fill in the initial forms and get a reference letter from your bank.Documentation:
- Project application based on the feasibility study;
- Environment impact, self-evaluation form(this is important for a manufacturing company);
- Site selection form for the project (Including lease agreement and ownership certificate of real estate);
- Name pre-approval application with five optional company names and business scope description;
- Letter of authorization for application of business Name;
- Bank reference letter;
NOTE: You will receive an approval letter and a business name approval notice within 5 working days after submitting the documents mentioned above, only then can you proceed to Phase 2.
Phase 2: Official Application for Government Approval
In phase 2 of the registration process we move onto government approval, and take the first steps to make your WFOE official.
Documentation:
- Feasibility report of project;
- Environmental evaluation report;
- Article of association (note: this is the key document that lays out equity terms);
- List of equipment & raw materials to be imported (if any);
- List of names for WFOE board members & official certificates of appointment;
- Names of WFOE General Manager, Deputy Manager, Supervisor and certificates of appointment;
- Copies of ID or Passport of Board Members, Supervisor and General Manager
NOTE: It normally takes around 20 days to get your certificate of approval. The certificate of approval expires 30 days after issuance.
Phase 3: Application for Business License
Now that we have your certificate of approval in hand, we can move on to register for your business license.Documentation:
- Application for establishment and registration of FIE (foreign investment enterprises);
- Form for registration of “legal representative” and “evaluation” form (declaring no illegal activities, criminal records etc.);
- Copies of ID or Passport of Board Members and General Manager & Deputy General Manager; résumé & photos of legal representative certified by Chinese Embassy (if outside of China);
- Article of association of WFOE;
NOTE: After Phase 3, the Business license will be issued in approximately 15 days and the WFOE will be officially established. You must open a local bank account and fulfil your registered capital obligations and officially register with various government departments as stated below.
Phase 4: Registration with Different Authorities
Your WFOE is now officially established, the next step is to get your bank account up and running and register with the various government departments listed below.Procedure After Obtaining Business License:
- Apply for enterprise organisational code;
- Apply for company stamps and seals;
- Apply for a tax registration certificate;
- Apply for certificate of foreign exchange;
- Opening of bank account (this will have to be done in person);
- Apply for the statistics registration certificate;
- Apply for import and export operating right;
- Apply for finance registration certificate;
- Apply for customs registration certificate.
In summary you would start with picking a name and providing bank reference letters as set out in phase one, the second phase will be the official application for government approval, thirdly you will apply for your business license and finally, you will register with all the different authorities listed. The above is a reference and the content can change from time to time, and thus we would recommend keeping in touch with a professional consultant to keep up to date with the latest news and changes in regulations.
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