OPEN COMPANY IN CHINA
China presents one of the world's greatest sourcing opportunities. Combining the advantages from the surrounding areas such as R&D capability from Taiwan and Japan, and China's WTO compliance policy, China is emerging as the manufacturing base for the world.
Representative Office (RO)
A representative office is just a subsidiary of a foreign company in China. If your are looking for a company, which needs a local presence to manage services or coordinate outsourcing business activities or research developing Chinese market, then a representative office is useful and inexpensive vehicles for establishing a presence in China. Main purposes of a representative office are conducting market research, monitoring purchasing activities, marketing and sales administration for sales conducted between China and your parent company etc. Representative offices cannot write bill for service or sales to their clients in China. But no initial capital requirement is required to establish a Rep Office. However, you can act like a liaison in matter of ordering, shipping, collecting money and so on.
Joint Venture
Joint venture is business where a foreign firm goes into businesses with local Chinese partners. Joint venture is usually established to exploit the market knowledge, preferential market treatment, and manufacturing capability of the Chinese side along with the technology, manufacturing know-how and marketing experience of the foreign partner.
Wholly Foreign Owned Enterprise (WFOE)
These are 100% foreign owned companies, originally developed for the specific purpose of encouraging foreign investment in manufacturing for export in Special Economic Zones (SEZs) in China, and they were prohibited from selling to the Chinese domestic market. Since a recent change in regulations, from 1 December 2004, WFOE's can now trade within China, and can sell wholly foreign manufactured goods in China. The capital requirements for such companies have also been dramatically reduced.
Tax implications
Tax duty of a WFOE includes :
Foreign and local staff's Individual Income Tax (IIT)
Business Tax (BT)
Income Tax (IT) etc.
As a WFOE may have different tax incentive from local government, different tax rates applies to different company. However, one should bear in mind that tax in China can be categorized into wither federal tax or local tax (local government). In most cases, tax incentive can only be got from local tax.
Setup cost
Varies according to client's situation and requirement. Our service ranges from basic registration to post-registration handling. Please contact us for quotation.
Maintenance cost ( Accounting, tax filing and auditing )
Tax filing has to be done on monthly and annual basis.
Moreover, there are statutory audit on the accounts & ledger.
Service fee for monthly accounting and tax filing starts from Rmb 2,000 while annual audit starts from Rmb 5,000 (depending on the size of the WFOE and the volume of operation).
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