Invest in China
| Prepare to Invest in China
If your company is ready for investing
in China, You need firstly to know the China market situation
and learn about the Investment Policies by Chinese government.
The Chinese government has divided its industrial projects
for investment into four categories classified as encouraged,
permitted, restricted and prohibited. They are indicated
in the Industry Category Guide for Foreign Investors. Secondly,
the scale of the investment amount is also worth noting.
For large investment projects of USD 30million or above,
the approval authority rests on central government (State
Council ministries); for projects under USD30million, in
the unrestricted category or quota free, or license free,
the approval authority goes to local government departments.
*Catalogue for the Guidance of Foreign Investment Industries
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| Find out Responsible Authorities
The State Development and Reform Commission
and the Ministry of Commerce are responsible for review
and approval of projects with total investment of USD30million
or above or other projects that require special approval.
However, The local development offices and commercial departments
of Provinces, Autonomous Regions, Municipalities are responsible
for review and approval of the following projects:
Projects with total investment under USD30million and in
the unrestricted category;
Projects under USD30million, but in restricted category
which have to be filed to the State Council ministries or
upper level offices; Projects involving quota issue or license
matters have to go through applications to the departments
of the Ministry of Commerce for consent Projects with USD30
million or above in the encouraged category, but with no
future side effects, which have to be filed in the State
Council ministries.
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| Learn about Procedures for
Project Set-up
For Joint Ventures with Equity or Contractual
partners
How many steps?
First step: Prepare and apply for project
proposal
On the knowledge of both partners’ business area and
financial status, the Chinese side is supposed to produce
a project proposal to be submitted to the State or local
development and reform department, or the technological
renovation department for examination and approval. If approved,
the Chinese side shall go to register the joint venture
for protecting the company name and trademark.
Second step:
Prepare and apply for feasibility study
Once the first step is finished, you and your Chinese partner
are supposed to work jointly on a feasibility study which
involves markets, capital, planned site, craftsmanship,
technology, facilities, environment protection, raw material
sales and purchases, economic yielding, proportion of local
currency and foreign currency injection, infrastructure…etc.
to be submitted to the State or local Development and Reform
department, or the Technological Renovation department for
examination and approval. Concurrently both you and your
Chinese partner can prepare to discuss and sign a contract
and other legal documents such as articles of associations.
Third step: Obtain a certificate of approval
After the feasibility study is approved, you can submit
the signed contract and the articles of associations to
the Ministry of Commerce or local trade and economic bureaus
for examination and approval. Once the approval is granted,
a certificate of approval for the joint venture is issued.
Forth step: Apply for Business License
Starting from the date of receiving the certificate of approval
for the set-up of a joint venture, you and your Chinese
partner shall apply to the industrial and commercial department
for registration to get a business license. The date of
the license is the date of the establishment of the joint
venture. * For Wholly-Foreign-Owned Enterprises If you or
your company wishes to set up a branch or a subsidiary or
a totally new company in China which is 100% owned by yourself
or by your company, you can entrust a qualified agency to
fulfill all the procedures of application and approval of
a foreign enterprise in China. The procedures are simple:
to fill up the application form for setting up a foreign
enterprise in China; to submit the articles of association
and relevant legal documents to a local trade and economic
department. Observed by the rules on Foreign Invested Enterprises,
the local authority office is to grant ( or not grant )
an approval. If granted, the local authority is to issue
a certificate for the wholly foreign-owned enterprise. The
registration and license are proceeded with the certificate.
When a business license is received, you have to go through
relevant registrations, such as opening up a bank account
for both Chinese and foreign currencies, tax registration,
customs registration, foreign currency registration, business
inspection and recruitment procedures.
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| How about Investment Environment
in China?
Since 1979 when the Law on Chinese-Foreign
Equity Joint Ventures was first introduced in China, the
work of utilizing foreign investment as an important subject
of opening up to the outside world initiated as China's
fundamental principle.
Over the past 24 years, Chinese macro economic environment
provided realistic guarantee and broad prospects for foreign
investment. The national economy in the early period, increased
by two digits, in the later period of the 1990s, the growing
speed still reached at 7-8% each year. The GDP in 1997 stood
at RMB 7,446.3 billion in 2000 at RMB 9,593.3 billion and
in 2002 at RMB 10. 2398 trillion.
The facilities of hard environment in China has been greatly
improved or upgraded. The infrastructure constructions like
transport, telecommunication, water, electricity and gas
supply, etc. have been completely renovated.
Along with the favorable production management conditions,
the soft environment for easy access to investment requirement
has gradually been amended to its perfect. A one-stop service
for examination and approval has been introduced in many
local government organizations: offices of different functional
departments are co-working to speed up the procedures. The
laws and regulations have been reinforced to adapt to comfortable
legal environment. Since China’s access to the WTO,
the commitments to the WTO entry, the opening degree of
the industries are attached great importance.
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| How Many Investment Forms
Available in China?
What kind of investment forms is available
in China? Which form is fit for you or your company? If
you read carefully, you can make a right choice of it. In
China, The absorption means of foreign capital are basically
divided into direct investment, foreign Government Loans,
UN organizations and other sources. The direct investment
forms, which are popularly operated in China, include Chinese-foreign
equity joint ventures, Chinese-foreign contractual joint
ventures, wholly foreign-owned enterprises, joint exploitation,
foreign-funded share holding companies, joint development,
compensation trade and processing and assembling, etc.
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| Any Legal Aspects to Comply
with?
To improve the legal environment and to
create a unified, consistent and steady, pragmatic and feasible
investment environment, the legal system is geared to open,
just and transparent principle. Since 1979, the legal framework
has gradually been structured and completed and constituted
a set of sophisticated legal system.
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| Try to Enjoy Maximum Privileges
and Preferences?
If you or your company decides to invest
in China, the first and foremost importance is to know as
much as you can the preferential policies available in China,
so that you can enjoy the preferential treatment at maximum
level.
China has provided a number of preferential policies to
stimulate overseas investment. For encouraged industries,
such as infrastructure facilities, apart from the preferential
terms, you can even expand your business scope; for the
purpose of promoting the economic development in middle
and west China, the geographical policies are introduced
to apply to different regions. Tax and Tariff preferences
are the core issue that companies concern most. For foreign
invested companies, the taxes may include corporate income
tax, personal income tax, turnover taxes (value-added tax,
consumption tax and business tax), land tax, stamp duty,
vehicle and vessel tax, urban real estate tax, etc.; for
import and export, tariff and import-stage value-added tax
may involved
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| Where to Invest? To Find
a Good Place to Start with?
Along with China’s opening door policy
going on adopted in 1979, the opening zones with different
orientations and functions have been extended down to various
regions which include special economic zones ((Shenzhen,
Zhuhai, Xianmen, Shantou and New Area of Pudong in Shanghai),
national economic & technological development zones
(ETDZ), national free trade zones (FTZ), national hi-tech
industrial development zones (HIDZ), national Taiwanese
investment zones (TIZ), national border & economic cooperation
zones (BECZ), national export processing zones (EPZ), national
tourist and holiday resort (THR). You or your company may
make a research and lock in a particular zone to test your
choice.
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