With in-depth understanding of Chinese market of foreign investors, many of them tend to set up wholly foreign-owned enterprise to do business. Setting up wholly foreign-owned enterprises will not only enable the investors to increase marketing decision and response speeds, but also provide the greatest security for the investors to protect their scientific research confidentiality and keep centralized management intact. Meanwhile, foreign investors contribute by installment towards the registered capital, where the first installment shall be paid in an amount at not less than 15% of the statutory capital within 90 days from the date of issue of the business license, and the last installment shall be paid up within 2 years.

Required Documents for Incorporation mainly includes:

1. The feasibility study report
2. Articles of association
3. Enterprise Name Approval in Advance Notice
4. The application for foreign investment company incorporation signed by the proposed legal representative
5. Meetings Record
6. The investor’s entity qualification certificate or the natural person’s ID card
7. The appointment letters and ID cards of directors, supervisors and managers
8. The legal representative’s appointment letter and ID card
9. Certificate of assessment of capital
10. Lease contract or certificate of property rights
11. Documents or certificates for earlier setup examination and approval

Taxes Involved in the Operation of Wholly Foreign-owned Enterprise in China:

1. Corporate Income Tax: generally the tax rate is 25%; the high tech enterprises with key aided enjoy 15% preferential income tax; those enterprises qualified for small profit enterprises enjoy 20% preferential income tax.

2. Tariff, and Value-added Tax on Importation: foreign investors carrying out investment in related file or projects, shall be entitled to first taxation, and then refund, of tariff and value-added tax or enjoy the tax exempt.

3. Value-added Tax, and Consumption Tax:  The foreign investment productive enterprise being a general taxpayer shall be entitled to “Exemption, Credit and Tax Rebate” of taxation or “Collection First and Refund Later” on the self-managed export, or export on consignment, of its self-produced goods. Meanwhile, during the process of export sales, they can enjoy the tax exempt of value-added tax.

The foreign capital investment enterprise shall be exempt from tariff and value-added tax on importation and consumption tax payable on the goods imported by the trade method of processing materials supplied by customers, and processing imported materials, and exempt from the value-added tax on production and consumption tax on the exported goods produced by it. While, to those foreign capital investment enterprise categorized as “encouraged” shall be entitled to full refund of the value-added tax payable on the home equipment, falling within the scope of the Exemption Catalogue, and purchased within its aggregate investment.

4. Individual Income Tax: Foreign nationals are entitled to a monthly exemption of RMB4800, with the remainder subject to individual income tax at 3-45%. Foreign nationals are exempt from individual income tax payable on the interests from saving deposits with financial institutions

5. Staff Social Security: The enterprise will make a certain social security contribution for its employee at a percentage of the employee’s monthly salary, of which the base and proportion are calculated differently due to different living standards in different regions.

Schedule of Taxation Involved in Foreign Enterprises in Major Industries(china taxation http://www.conpak.com/China-Taxation.html)

Taxation	Tax Rate	Taxation Involved in Various Industries					Linkage
		Manufacturing	Commerce	Services	Processing with materials, processing according to samples and assembling parts supplied by investor or clients and conducting compensation trade	Representative Office
Value Added Tax	17%			–	–	–	Click for Value Added Tax details
Business Tax	3%-20%	–	–		–		Click for  Business Tax details
Consumption Tax	3%-45%		–	–	–	–	Click for Consumption Tax details
Corporate Income Tax	15%-25%						Click for Corporate Income Tax details
Real Estate Tax	1.2%						Click for  Real Estate Tax details
Land Value Added Tax	30%-60%						Click for  Land Value Added Tax details
Stamp Duty	0.005%-0.1%						Click for Stamp Duty details
Customs Duty	As provided by the Customs			–	–	–	Click for Customs Duty details
Individual Income Tax	3%-45%						Click for Individual Income Tax details

The establishment of a company in China is one in all the primary curtails facets of doing business in China, if your company’s arrangement is not set up properly. It is not being structured properly or doesn’t deliver the accurate licenses or authorities it can be incurable for your business or in the least case scenario limit its capacity to develop and reach China. China is still an area with each opportunity and risks in the eyes of most investors attributable to factors like political and cultural backgrounds. Our China company formation facilities are personalized to benefit foreign entrepreneurs coming into the China markets to lawfully and legitimately conduct business.               

Meanwhile 1978, once China released its doors to the outside world, China has appreciated marvelous annual economic growth. It’s currently the second largest economy within the world and therefore the world’s single largest recipient of foreign direct investments among evolving countries. China’s concurrence to the World Trade Organization is widely estimated to create an extra wave of internal investment from foreign corporations because the terms of entrance to new sectors of the China economy area unit increasingly liberalized. Before starting a business in China, you have got to know what the options are. Foreign Investors generally start a business existence in China in one amongst five ways. These are totally Foreign Owned Enterprise (WFOE), Joint Venture, Partnership Enterprise (PE), Honk Kong Port Company and Representative Office. The variances between each of that square measure abridged here those five modes of business presences in China. The investment of capital amount essential for a remote owned entity in China differs reckoning on location and the nature of the business. 100% foreign company possession is allowable in China but the business activities of which a remote company will have interaction in are heavily regulated and restricted to those declared on your company business license. A Foreign invested in Partnership Enterprise (FIPE) may price a try if investors don’t need to invest a great deal of capital to determine a business in China. We don’t request to be grasped all things or to simply accept add areas where others could offer a more robust service. We will investigate your inquiries fastidiously we have a tendency and that will allow you to comprehend at once if we believe your substance is doubtful to make the results you desire or others would signify you better.

Launching an incidence in China remains an exciting expertise for unwary organizations, even with our proficiency and expertise we will seek the way for prospective market competitors. China has three standard kinds of business establishments offered to foreign investors who would like to build their companies.

China which is one of the most populated countries has a good economy. It also has a fast growing economy. One can observe that a lot of products from this country are being exported all over the world. For these reasons, a lot of businesses are being established of formed in this country. Setting up a business is not that complicated and people from other countries can consider setting up a business in China.
Wholly Foreign Owned Entity (WFOE) is the one which is most commonly used or formed by foreigners. A lot of businesses of such kind are being established as China’s economy continues to grow over the years. Many foreigners consider forming a Wholly Foreign Owned Entity as it the one which has the least complicated process of formation. The steps on forming a WFOE in China are stated on the following paragraphs. These steps can be one’s guide on forming a WFOE in China so that problems that you can encounter on such process can be minimized. Furthermore, one who wants to have his own business in China can also have a faster and easier formation of a company.
The first step on the formation of a WFOE is to determine the legal parts of your business. One shall be sure that the form and the business activities of your company are legal with regards to the government in China. You won’t want to establish an illegal company without you knowing it.
The owner of a WFOE on China is required to provide all the necessary documents. These include proper documentation from the owner’s country and also a document which will prove the financial capacity of the owner of the WFOE. Make sure to provide all of these documents.
Other necessary documents are the Articles of Incorporation or its corresponding document for other forms of business, a business license, a certificate of status, a bank letter with regards to the investor or owner’s company and a description of the company’s activities.Â
Make sure that you will be able to submit all of these documents on the right form. The first four documents shall be submitted in Chinese while the last one is not required to be in Chinese. Despite of this, it is required to have a summary of the letter in Chinese.
After this, one must have the approval of the Chinese government for the business. This is very important and one can do so by submitting the necessary documents which include the Articles of Association, Lease, Feasibility Study, proposed personnel salary and benefit budget and other necessary documents. Complying with all of these is very important because doing so is mandatory.

Before you embark in the incorporation of a business it is important to first know the type of business entities that you are entitled to open as a foreigner and also as a local investor. This will; help you analyze the advantages and disadvantages of each hence enabling you to make the right decision.

Types of business entities

Fully owned foreign enterprise is whereby a foreigner owns the company fully; this is most preferred mode of investment for international investors that are planning to invest in China. It entails manufacturing processing and assembling of parts in China. This type of enterprise does not require huge registered capital. This business is means for productions lines but with time it has proved itself that it can be of use for service a service industry. A manufacturing business entity stands to enjoy tax and incentives on export processing zones or free trade.

Representative offices (RO)

A representative office generally means that production takes place in a different place and this office is used as distribution point of these products in China. However, such offices have their own disadvantages such as:-

• They are not allowed to issue official invoice or receive revenue
• It cannot be termed as a legal entity operating in China
• It is not allowed to hire local Chinese staff
• The representative’s salary is taxed on a monthly basis
• All of their expanses are taxed.

Joint Venture

This is whereby two different parties come to an agreement of development at a given time, they establish a new entity, purchase new assets to develop an equity. Unlike other type of business, in joint venture both parties invest their money, effort and time to establish the original business goal. Joint venture is usually used for small projects but there are major corporations who prefer this method for diversification.

While working with joint ventures it is important to come up with a strategy on how you can sustain the future of this partnership. Most people focus on the short term benefits ignoring that the long term success is what really matters. It is vital for all the partners of the joint venture to have a common goal which is success; they should be honest, clear communication and integrity to achieve these goals.

Having had a review of the company’s that China allows for operation, it now become easier to make a decision on which one will best suit you and your time of business.