The Location:
The People's Republic of China (PRC), is located in East Asia. The capital is Beijing; the official language is Standard Chinese, and the currency is the Renminbi (CNY). The country is one of the world's fastest-growing major economies; the world's second-largest economy by nominal GDP, and the largest by purchasing power parity (PPP), as well as the world's largest exporter, and the world’s second-largest importer of goods. The PRC is a member of the World Trade Organization (WTO); the United Nations (UN); the G20; the Bangladesh–China–India–Myanmar Forum for Regional Cooperation (BCIM); the Asia-Pacific Economic Cooperation (APEC); BRICS, and the Shanghai Cooperation Organization (SCO), among others.
Key Benefits & Features of Company Formation:
- Foreigners can set up two structures in China: a Wholly-owned Foreign Enterprise (WOFE) – which is a limited-liability corporation organised by foreign nationals and capitalised with foreign funds; or a Representative Office (RO), which is a branch office of a foreign company set up in China.
WOFE
- Mainland Chinese investors are not required, therefore there can be no interference from such.
- Trademarks and Intellectual Property benefit from the stricter protection of international law.
- Shareholder Liability is limited to original investment.
RO
- No capital contribution requirements.
- Is restricted on the operational activities it is allowed to carry out, as its purpose is to act on behalf of its parent company and facilitate dealings with Chinese customers and businesses (i.e., market research, business development, contact building and the like).
- Parent company is required to fund all expenses of the RO, whilst the RO itself is not permitted to gain income – therefore is not permitted to issue invoices as a result.
Additional Information:
- The process for registering a company in China can be complex and requires a significant amount of complicated paperwork to be filed.
- Approved applications can expect high-profit potential.