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Tips and procedures to set up an office in China

Increasing number of American companies are setting up their own presence in China in order to source products or services directly from China or enter the Chinese market rather directly.

Nevertheless, given the foreign nature of complex local policies, regulations and overall business environment in China, it is so critical to be proactive and fully prepared before you take the strategic move to set up your company's own presence in China.  

Business set-up in China is a big project by itself, which requires financial and time commitments, 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.

First impressions count for a lot. Your office is the face of your business and so the last thing you want when investing an unfamiliar country is to choose an unsuitable office. Deciding on the location or locations of your offices in China is fundamental to the success of the business, and there are numerous decisions to be taken into account before deciding upon where to set up.

These include infrastructure development, the extent of the presence of foreign and domestic firms in the area, and the level of redevelopment of policies. The sector of your business is also important when determining its location, particularly in the manufacturing sector where communications are vital to obtain access to raw materials and efficiently distribute your products. Furthermore, once the right location has been found it is necessary to find an office in which to base your operations from, which can also be perplexing to the untrained investor. Chinese investment laws can be fraught with complications and contradictions, with bureaucracy dominating every aspect of the process.

This is why we provide comprehensive advice on how and where to set up your business, taking into account the key considerations discussed above. Our extensive experience and specialist knowledge puts us in a unique position to analyse and evaluate the appropriate investment locations available throughout China. We can scour the market and find the right location and conditions for your business to succeed.

We can guide you through the process from choosing a suitable location through to preparing the correct documentation and finding appropriate staff. But not only do we offer to sort out all the bureaucratic necessities that inevitably come when setting up an office in a new country, but, unlike other companies, we can also arrange appropriate fixtures and fittings for the office itself. Things which can often be overlooked such as decoration, furniture, office equipment and facilities will also be catered for, as well as any necessary warehouse storage of goods.

1.Business License
2.Tax registrations
3.Work and residence permits
4.Other related licenses and permits
5.Selection of office space,
6.Decoration, furniture, office equipments & facilities
7.Arrangement for warehouse or storage for the goods
8.Secretarial/assistant and administrative staff
9.Accommodation arrangement for expatriate staff
10.Orientation visits for the expatriate staff and/or representative

Several possibilities exist for establishing a business presence in China, which each requiring different legal set-ups and providing differing access to the Chinese market. These include a Representative Office, a Joint Venture or a Wholly Owned Foreign Enterprise. There are fairly rigorous and rigid procedures which must be adhered to in order to correctly register the RO, which can lead to refusal of your licence if you are unfamiliar with Chinese laws and bureaucracy.

An RO is perhaps the most basic form of investment in China which is essentially a derivative of a parent company. It enables a business to acquire office space and open bank accounts but cannot engage in direct business activities. A JV is different to an RO in a crucial way. It is a limited liability company and is able, therefore, to buy land, construct buildings and hire local labour independently. A WOFE is yet another method of investing in China which gives the foreign investor complete control over the investment plans of the firm, without any Chinese intervention. There are drawbacks to this such as the lack of established Chinese contacts and a minimum capital requirement, but there is total control over company policy.

When preparing the request for establishing any of the above types of venture a veritable mountain of documents is required. These must be completed and registered in the correct order, all with different registration bureaux, with different the various departments each requiring different documentation. Only after this potentially drawn out procedure can you be given a licence to conduct business, which still may be refused, if the documentation fails to satisfy the authorities.

To those unaccustomed to Chinese law and bureaucracy, setting up any kind of venture is a complex process which can present you with one of your biggest hurdles in China. This is why we offer you our business advice and registration service. Our highly qualified staff are able to help you with all the procedures from start to finish, from defining the aim of your business to preparing and advising on all the necessary documentation.

If you are at all unsure about which type of venture is most suitable for your business, we can give you comprehensive advice on which is best for your individual circumstances. We will examine your business plan and make the appropriate choice for your business to succeed. Because of our extensive experience in China we are able to streamline the necessary processes with our network of local authority and government contacts. This will ensure that your representative office will be set up as soon as possible and without any hassle.

 
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I am a licensed China lawyer. Most clients are foreign nationals and companies. China Lawyer Blog have associates in Beijing, Shanghai, Tianjin, Guangzhou, Suzhou, Nanjing, Qingdao, Fuzhou, Hainan, Hefei, Wuhan, Xian, Changsha, Xiamen and Hangzhou. Learn More

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This China Lawyer Blog is aiming at providing better knowledge and understanding of Chinese law for foreigners. Should you have any legal issue in China, do not hesitate to contact China Lawyer Blog for consultation. Preliminary consultation is free. Further legal service, however, will be charged in due rate and in due course.

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China Lawyer BLog AuthorPeter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.