Shenzhen is the second largest city in Guangdong province,
a regional manufacturing and financial hub and one of the richest cities in
China. The city, originally a village north of Hong Kong, was first developed
as a special economic zone when economic reforms were introduced in the late
1970s. After over 30 years of sprawling, it has become one of China's top four
first-tier cities along with Shanghai, Beijing and Guangzhou. With a population
of over 20 million, the city's GDP grew 10% to RMB1.3 trillion in 2012. The
Shenzhen Stock Exchanges, one of the only two on the mainland, focuses on small
and midsized companies as compared to Shanghai's where larger state-owned
companies are traded. With sound infrastructure and easily recruited many
talented personnel in Shenzhen, Foreign company can take this advantage to set
up company in Shenzhen as china market entry strategies
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.
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.
Shenzhen Business Formation also can be understood as:
Shenzhen company setup, Shenzhen corporate formation, Shenzhen business setup,
Shenzhen company registration, Shenzhen business establishment and Shenzhen
business registration.
Setup Business in Shenzhen
China, set up company in Shenzhen as china market entry strategies
To facilitate people who want to invest and set up
company in Shenzhen, here is an introduction of Types of business presence in
China:
Before starting up a business in China, you have to know
what are the options. Foreign Investors generally establish a business presence
in China in one of five modes: Wholly Foreign Owned Enterprise (WFOE);
Representative Office; Foreign Invested Partnership Enterprises (FIPE); Joint
Venture and Hong Kong Holding Company.
Wholly Foreign Owned Enterprise
(WFOE) is a Limited liability company wholly owned by the
foreign investor. WFOE requires registered capital and it's liability of equity
, can generate income, pay tax in China and it's profit could be repatriate back
to investor's home country. Any enterprise in China which is 100 percent owned
by a foreign company or companies can be called as WFOE. No. minimum registered
capital is required for WFOEs with scope of business of consulting, Trading,
retailing, information technology etc. in China. There are minimum registered
capital still required for some industries for instance: Banking, Forwarding
etc Since China still maintains foreign currency control policy, it's still
advisable to choose registered capital within RMB 100,000 ~ RMB 500,000 as the
minimum registered capital. Companies can now determine how much capital will
be required to maintain their operations and must simply ensure that they meet
those targets within a period of 10 years.
Representative Office (RO) is a
Liaison Office of it's parent company. It requires no registered
capital. It's activities would be: product or service promotion, market
research of it's parent company's business, Quality Control liaison office etc
in China. RO generally is prohibited to generate any revenue nor generating
contracts with local businesses in China.
Joint Venture (JV) is a Limited
liability company formed between Chinese investor and Foreign investor.
The parties agree to create a entity by both contributing equity, and they then
share in the revenues, expenses, and control of the enterprise. JV usually been
used by foreign investor to engage the so called restricted in areas such like:
Education, Mining, Hospital etc.
Since March 1, 2010, Measures of
Establishment of Foreign Invested Partnership Enterprises (FIPE) in China is
taking effect. The regulation, which take effect since March 1,
2010, are known as the Administrative Measures for the Establishment of
Partnership Enterprise in China by Foreign Enterprises or Individuals. There's
no required minimum registered capital for a Foreign Invested Partnership
Enterprise (FIPE) in Shanghai, Beijing, Shenzhen, Hangzhou and rest cities of
China
Hong Kong Company usually been used
as a Special Purpose vehicle (SPV) to invest Mainland China.
Hong Kong is one of the quickest locations to Incorporate a business. Although
a HK company is not a legal entity in Mainland China (MainlandChina and Hong
Kong, See Wiki 1 country, 2 systems), lots foreign investors, especially
investors from Europe and North America still chose to setting up a Hong Kong company as SPV
to invest China.
Guideline to Business Set-up in ShenZhen
More and more international SME are setting up
their own presence in China in order to source products/services
directly from China or enter the Chinese market. However, given the
alien nature of local regulations and business environment in China, it
is critical to be proactive and fully prepared before you take the
strategic move to set up your own presence in China.
Here are some "must-knows" before you set up the business in ShenZhen China:
1.You have more than one option for a local
presence in China. Your China presence may be in the form of a wholly
owned foreign enterprise, a contractual joint venture, an equity joint
venture, a representative office or a local representation by a third
party (local secretary/representation service companies).
2.Carefully define your business scope for the
China presence. China National Development and Reform Commission may
prohibit, restrict, permit or encourage your business set-up based on
your business categorization and scope. Hence it is critical to
carefully define your business scope so as to be permitted or encouraged
to set up the presence.
3.Select the right location for your China
operation. China abandoned its preferential tax rate for investments of
foreign companies from January 1st 2008. However, some areas still offer
local preferential policies for foreign investors in terms of land
leasing/procurement, staff recruitment and management, local tax etc.
4.Confirm the minimum registered capital for your
China operation. The Chinese government requires certain minimum
registered capital for various types of businesses. However, local
Industry and Commerce Administrations may decide on your minimum
registered capital based on their judgement of your business scope and
operation scale. You need to confirm with local government agencies the
minimum registered capital through local contacts before taking any
other actions in case they require an amount far above your financial
resources available for the China operation.
5.Integrate commercial clauses in the Articles of
Association to maximise profit repatriation into your country. You may
have commercial arrangements between your Head Office and the
subsidiary in China in order to guarantee maximum profit repatriation.
However, some arrangements must be included as part of the Articles of
Association to be valid. The Articles of Association is to be submitted
to local government agencies for approval and filing during business
license registration. Hence, you must incorporate necessary clauses in
the Articles of Association in the first instance.
6.Fully understand employers' responsibilities
and liabilities in China. China issued the new Law of Labour in 2007
which specified issues on employment contract, redundancy, etc. Without
preliminary knowledge of this law, you may end up spending a huge amount
of time and money terminating the contract with under performing
employees, as the structure of the contract was wrong. You also need to
be aware of the mandatory employee welfare and benefits so as to include
such cost in the budget.
7.Conduct thorough due diligence and credit check
on your joint venture partners. Your partners may not be what they
claim to be. China has the business culture to show their wealth and
status by driving luxurious cars, wearing prestigious watches and
owning an impressive factory. Hence your Chinese business partners may
look financially viable and well connected but, as a matter of fact,
live on bank loans and personal debts.
8.Develop a comprehensive local employee
management system. It is a hard job to recruit the right staff in a
foreign country. It is even harder to effectively manage the local staff
in a foreign country. A sound and robust employee management system
will encourage the engagement and commitment of local staff and avoid
potential risks. You may include reporting and communication policies,
staff training, performance assessment, remuneration, career management
and employee management manual in the system.
Business set-up in China is a big project by
itself, which requires financial and time commitmentsArticle Submission,
business management knowledge and China expertise. Identifying a
competent agent to manage the complex process will be a cost and time
effective way to avoid potential pitfalls
Since 2006, Tommy China Business Consulting has
been focusing on consulting services for our clients to invest in
ShenZhen. We offer a range of company formation services including
helping you to set up:
-Wholly Foreign Owned Enterprises (WFOE )
-Representative Offices
-Joint Ventures (Equity/Co-operative)
-Foreign Invested Partnership Enterprises (FIPE)
-Hong Kong Holding Company.
-Wholly Foreign Owned Enterprises (WFOE )
-Representative Offices
-Joint Ventures (Equity/Co-operative)
-Foreign Invested Partnership Enterprises (FIPE)
-Hong Kong Holding Company.
Contact Tom Lee now for one-stop services setting up your
company in ShenZhen.
Email: tomlee@tommyconsulting.com,
tomlee_cn@163.com,
WhatSapp/Wechat/Cell Phone: +86 18926401128, Skype: tomleeli
Tel: 86-755-25809219,Fax: 86-755-83256658
Email: tomlee@tommyconsulting.com, tomlee_cn@163.com,
WhatSapp/Wechat/Cell Phone: +86 18926401128, Skype: tomleeli
Tel: 86-755-25809219,Fax: 86-755-83256658
