16 September, Handelsbanken. Helping your business succeed in Greater China. 14 th September

Size: px

Start display at page:

Download "16 September, Handelsbanken. Helping your business succeed in Greater China. 14 th September"

Curtis Barton
5 years ago
Views:

1 16 September, 2015 Handelsbanken Helping your business succeed in Greater China 14 th September

2 Company Establishment in China 2

3 Incorporating in China 3 The process of establishing can be bureaucratic and complicated Most Nordic companies use assistance to go through registration process Before 2004 foreign companies were not allowed to register themselves Rules and regulations tend to change all the time

4 The First Steps Decide the nature of your business Select region Decide what type legal entity that suits your business

5 1 Nature of Investment 5 The nature of the business must be declared during the licensing phase Catalogue for the Guidance of Foreign Invested Industries Industries are classified into four categories in the Catalogue for the Guidance of Foreign Invested Industries - Encouraged - Permitted - Restricted - Prohibited In Shanghai Free Trade Zone the CGFII has been replaced by a negative list

6 2 Which Region is Suitable for Your Business? 6 Chongqing Pop: 32.8m Beijing Pop: 21.2m Capital >800 years Tianjin Pop: 13.4m Shanghai Pop: 24.1m Largest city Directly Controlled Municipality Province Autonomous Region Guangzhou Pop: 12m Shenzhen Pop: 12.3m

7 2 Which Region is Suitable for Your Business? 7 GDP per capita (CNY) Xinjiang Tibet Qinghai Inner Mongolia Gansu Shaanxi Heilongjiang Jilin Liaoning Beijing Tianjin Hebei Henan CNY 244,000 CNY 134,000 CNY 80, ,000 CNY 60,000 70,000 CNY 50,000 60,000 CNY 30,000 40,000 CNY 20,000 30,000 CNY 10,000 20,000 Sichuan Anhui Hubei Jiangxi Hunan Guizhou Fujian Yunnan Guangxi Hong Kong Hainan Shanghai Taiwan CNY 628,000 CNY 355,000 CNY 348,000 CNY 295,000 CNY 286,000 CNY 242,000 CNY 42,000

8 2 Which Region is Suitable for Your Business? 8 There are seven large dialects or languages Only 60% of the population has Mandarin as their first language

9 2 Which Region is Suitable for Your Business? 9 Car Manufacturing Coal, Dairy Chongqing Produces 30% of the world s laptops Chemical Car Manufacturing Yiwu Produces 50% of the world s socks Light Manufacturing

10 3 Incorporation Vehicles 10 Representative office market research, develop partnership, promote business channels No registered capital May not generate revenue May not directly hire local employees Taxation on expenses Equity joint venture At least on foreign investor Risk and profit shared by the percentage of the capital investment May be used in industries where WFOEs are not allowed to operate Should have clear business objective and exit strategy Wholly Foreign Owned Enterprise Limited liability company Invested by one or several foreign investors May engage in business generating transactions May hire local employees Currently most common incorporation vehicle Other types Cooperative joint-venture Foreign invested company limited by shares Foreign invested partnership Branches (only banks so far)

11 Total Investment and Registered capital 11 Foreign companies in China are seen as time limited investments All foreign companies need to estimate their initial Total Investment The Total Investment is the total capital needed to get the company up and running and make profit Equity is computed as a ratio of the Total Investment and is called Registered Capital < USD 3million USD 3-10 million USD million USD million Not less than 70% of the total investment Not less than 50% of the total investment Not less than 40% of the total investment Not less than 1/3 of the total investment

12 Capital Structure a Little Bit Different from Home 12 The balance between the Total investment and the Registered Capital is called Foreign Debt Quota FDQ or borrowing gap There is short-term and long-term FDQ Long-term quota will disappear after repayment Initial Capital Structure Total investment Registered capital (70%) FDQ (30%) Onshore borrowing is unlimited

Too Many Cooks Spoil the Broth 13 State administration of foreign exchange State administration

Release Policy Release Main Functions of the NDRC News Release 12-01-2013 Sunday Chinese Version

Cooperation of the NDRC Main Functions of Departments of NDRC China s Policies and Actions for

-China Statement on Climate Change (2013-04-15) JOINT STATEMENT ISSUED AT THE CONCLUSION OF THE

13 Too Many Cooks Spoil the Broth 13 State administration of foreign exchange State administration for Industry and Commerce Home Message from Chairman Xu Shaoshi Main Functions of the NDRC News Release Policy Release Main Functions of the NDRC News Release Sunday Chinese Version More Bureau of taxation Leadership of the NDRC Main Functions of the Department of International Cooperation of the NDRC Main Functions of Departments of NDRC China s Policies and Actions for Addressing Climate Change(2013) ( ) Joint U.S.-China Statement on Climate Change ( ) JOINT STATEMENT ISSUED AT THE CONCLUSION OF THE 11th BASIC MINISTERIAL MEETING ON CLIMATE CHANGE ( ) Agreed Minutes of the1st China-India Strategic Economic Dialogue ( )

14 In China We Use Chops 14 Company chop Invoice chop Legal person chop Contract chop Financial chop Custom chop

15 Main Certificates Required 15 Certificate of approval Two sets of business licenses Two sets of code certificates Two sets of tax certificate Basic account opening certificate Capital verification report

16 WFOE Registration Steps 16 Name Approval Certificate of Approval Stage I Registration Business License Filing and Carving of Seals Enterprise Code Certificate Foreign Exchange Approval Registration with Tax Bureau Open CNY Basic Account, Capital Account and Foreign Currency Settlement Accounts Stage II Post Registration Open CNY General Accounts Capital Verification (Optional) Conversion of Capital into CNY (if not injected in CNY) Stage III Post Capital Injection

17 Bank Accounts in China 17 Basic Account General Account Current Account Capital Account Capital Account CNY CNY Foreign Currency Foreign Currency CNY Only account for cash and salary payments Only one basic account per company CNY transaction account No limitation on no. of accounts Foreign currency transaction account No limitation on no. of accounts Account for injecting registered capital (equity) Only one capital account per company Account for injecting registered capital (equity) Only one capital account per company

One Child Policy Fines Relative to Income Levels in China

One Child Policy Fines Relative to Income Levels in China A Report by All Girls Allowed November 1, 2012 Summary: Provincial enforcers of China s One Child Policy impose strict fines, called social burden