Answers to Common Questions on Doing Business in China
by Arina Smith Business 07 May 2020
Opening a company in China is a dream come true for many entrepreneurs. But with a lot of information and misinformation out there, many people opt to hold back as they seek answers to different questions running through their minds. So, here are the answers to the common questions to help you make the big decision to take your business there.
What are the Main Types of Company Formations in China?
When you decide to take your business to China, there are three main types of businesses that you can us. You can opt for the wholly foreign-owned enterprise (WFOE), joint venture, or representative office:
- A WFOE is a type of business formation that allows you to own 100% of the share capital. This means that you have total control over the operations of the business.
- If you go for a joint venture, you have to enter into a partnership with local people who must also own controlling shares or 50+% shareholding.
- Representative office. A representative office is a business formation that is considered fully under the parent of the company back at home. Notably, the representative office comes with many limitations in that it is not allowed to do profit-based activities. Therefore, you can only do activities such as market study and offering support to staff.
What Special Benefits Do Investors Get By Incorporating their Companies in China?
China has gone out of the way to ensure that it builds and supports a thriving business-based economy. So if you are planning to incorporate a company in China, here are some special benefits that can help your enterprise to grow rapidly:
- The country has a highly developed infrastructure that can help your enterprise conveniently move raw materials and finished products to the target market.
- The Chinese administration has many supportive policies and systems such as its straightforward tax regime that allows businesses to grow and succeed.
- The large population in China provides a ready market for different products and services. Furthermore, you will be able to take advantage of the trade agreements that China has entered with different countries across the globe.
Can I Own a Company 100% in China?
Yes, you can. You only need to open a wholly foreign-owned enterprise. Here, you have full control and can do business just like other companies opened and opened operated by the local residents.
What are the Best Areas for Investment in China?
In China, the areas for investment are diverse because of the large population, which is highly diversified. However, the government greatly encourages investors who are in the tech and manufacturing areas to help drive the economy. This is why the tech sector and manufacturing industries have been thriving so much in the country. Other top areas for investment include:
How do I Enjoy Lower Tax Rates for My Manufacturing Company in China?
Many investors have been wondering about one thing: why is China attracting more investors, especially in manufacturing than its neighbors? China encourages more manufacturers to set their companies in the inland in order to spur equal growth in the country. Therefore, if you want to set up a manufacturing company, consider setting it up in an inland province to enjoy lower tax rates.