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China Company Formation/Corporation Registration/Setting up company - China company registration

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China company formation assists global entrepreneurs legitimately conduct business in one of the world’s fastest-growing economies. The following information will help you determine whether China company formation is the optimum corporate structure to fulfill international business objectives:

Advantages of China Company Formation 

1. China company formation is popular with foreign investors looking for a foothold in the world's third-largest economy (after the EU and the USA), based on nominal GDP data from the IMF. China is the recipient of more foreign direct investment (FDI) than other nations in Asia. Furthermore, China offers a vast labour pool that, in the major cities, increasingly comprises sophisticated graduates. 

2. A China Representative Office is an ideal way for entrepreneurs choosing China company formation to market a foreign parent company’s services in China.

3.  A foreign-owned company can obtain tax exemptions if based in a Free Trade Zone or Export Processing Zone. Furthermore, to encourage foreign investment some provinces offer preferential corporate tax rates. Although the most popular locations for foreign investors are Beijing, Guangzhou, Shanghai and Shenzhen, Healy Consultants will compare regional options and provide a professional recommendation based on our client's requirements. Other notable options include Suzhou, Qingdao, Ningbo and Dailan.

4. A Chinese company accesses double taxation treaties with 95 countries including Australia, France, Germany, India, Singapore, the UK and the US to support China company formation. There are more tax agreements in the process.

5.  100% foreign ownership is permitted for a Chinese company. For more information, visit Healy Consultants' Wholly-Owned Foreign Enterprise (WOFE) page. 

6. In its 2010 World Competitiveness Yearbook, the Switzerland-based IMD positively ranks China as the world’s 18th most competitive economy. The ranking takes into account factors including economic performance, government efficiency, business efficiency and infrastructure. Furthermore, in the World Economic Forum's Global Competitiveness Report 2009-2010, China is ranked at a positive 29th place. 

7. Following China company formation, Healy Consultants can open a corporate bank account with one of the world's leading retail banks, including HSBC, Standard Chartered and Citibank. For more information, visit our China corporate bank account page. For a wider overview of our services visit our Other services to support China incorporation page. 

Disadvantages of China Company Formation

1. All Chinese companies suffer a fixed 25% tax on global profits. However, tax deductions are available for foreign-owned companies (see point 3 above). 

2.  Although 100% foreign ownership is permitted, the company activities allowed and minimum start up capital required varies depending on geographical region. The activities of a foreign-owned entity are restricted to those on its business license, issued by the provincial government. Because of this, it is critical for a foreign investor to carefully prepare incorporation documents. Healy Consultants handles all pre-incorporation documentation for clients to ensure the scope of business license matches the planned activities of the company. Examples of the restrictions placed on Chinese companies include the inability of a Representative Office to make sales and invoice clients in China.

3.  Both a foreign-owned entity and a Representative Office must be located in a prime office premises pre-approved by local government and municipal authorities. Consequently, office premises eligible for foreign-invested companies are expensive to rent. 

4.  China company formation takes up to 6 months due to inefficient bureaucracy and complex licensing procedures involving local and provincial authorities. To highlight this, China ranks poorly as the world’s 79th easiest place to do business in the 2011 Doing Business Survey by the World Bank, which takes into account China company set up procedures, time, cost and minimum capital required to start a business. China also negatively ranks as the world's 140th freest economy in the Heritage Organisation’s 2010 Index of Economic Freedom, a measure of freedom enjoyed in business, trade, monetary, financial, investment and labour markets.

5. Forbes Tax Misery Index 2009 rated China as having the 2nd highest tax misery in the world. The index takes into account corporate income, employer social security, personal income, employee social security, wealth tax and VAT/sales. Forbes suggests the index can be used as a proxy to evaluate whether a country抯 policy attracts or repels capital and talent. 

6. China's legal system has a poor international reputation, for example the enforcement of intellectual property rights. As evidence of this, China ranks as the world's 78th-least corrupt country in the 2010 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians. Moreover, China is poorly ranked as the world's 27th most competitive economy in the World Economic Forum's Global Competitiveness Report 2010-2011. 

7. After China company formation, all entities are required to submit financial statements and tax returns to federal and provincial authorities. Healy Consultants will assist our clients efficiently and effectively to complete this annual statutory obligation. 

Why Choose US to Accomplish Your China Company Formation and Business Registration:

  • Introduction to trusted Business Registration agent and guidance on document preparation
  • A prestigious city office location
  • Office facilities to base your new business form
  • A local business telephone number at your chosen city location
  • Dedicated receptionist to answer your calls in your company name and transfer to you
  • Access to corporate meeting rooms and boardrooms for as little as 10 mins or the whole day
  • Professional reception area where your guests will be warmly welcomed prior to meetings
  • Flexible lease terms
  • Experienced multi-lingual personal assistants available to support you when you need them
  • Some complimentary access to the executive business lounge in any local or international location
  • Complimentary use of a day suite office in any other city for up to 3 days per month
  • 24 hour per day voicemail with delivery to your email and direct diversions such as press 1 for mobile, press 2 for home or perhaps 3 for a colleague

  • Goal

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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.