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Shanghai Foreign-owned Enterprise

Update Date:2018-5-3 9:21:18 Source:Tannet (Malaysia) Sdn Bhd Views:74

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Foreign-owned Enterprise is also called foreign-funded company, foreign-owned company, foreign company, foreign-funded enterprise and foreign enterprise.Since the implementation of the reform and open-up policy, Shanghai has been seen a booming economic, which brought not only numerous business opportunities, but also investors all over the world. Especially, the requirements of foreigners investing in Shanghai has released. And it will benefit more foreigners who extend business in Shanghai.

 

I. Foreign-owned Enterprise-WFOE

Normally the WFOE is Limited Co. A certain rate between the equity capital and the investments is regulated and is according to the sector. Two reports are necessary for the formation of a Ltd. To found a Ltd. You need a project report with the documentation of the project, the aim, etc. as well as a feasibility study. In most of the times both reports can be put together into one document. Next to these reports a good relationship to the government is an advantage. If you follow just the exact rules rather than the Chinese way while founding the company, the formation can take a long time.

 

II. Foreign-owned Enterprise-Representative Office

The formation of a representative office is for many companies the first step to Shanghai. In most of the cases these companies already have a customer base in Shanghai and want to support them or get accustomed to the new environment. The representatives are founded out of marketing and promotion reasons in most of the times. A sponsor is necessary for the formation of a representative office in Shanghai. This has to be a Chinese company. Mostly the company is founded in cooperation with existing customers or business partners. The problem concerning a representative office is that they are not allowed of signing business deals or contracts. They are not allowed to be involved in any business operations as well as selling products in Shanghai. For such activities they need a Chinese company or trade office. The initiation and searching of new business contacts, consultation and perhaps the creation of market studies are their main tasks.


III. Foreign-owned Enterprise-Joint Venture (JV)

In earlier year the Joint Venture was the most common business type for foreign enterprises in Shanghai. In some sectors it was and still is necessary for the formation of such a company as a car producer or the aircraft industry. A crucial point for the formation of the JV is to gain market shares, customers and knowledge about the Chinese market through the JV-partner.

 

IV. Foreign-owned Enterprise-FIPE

FIPE stands for Foreign Invested Partnership Enterprise. In Shanghai, there are 4 modes of business presences for foreign investors: WFOE(65%), Representative Office(20%-), FIPE(10%+), Joint Venture(5%). FIPE becomes more and more popular among young entrepreneurs with their new startups in Shanghai as it requires no registered capital but the FIPE still could hire people, collect payments, issue invoices, apply for work & residence in Shanghai freely. It's not a surprise that most people you meet in Shanghai may not know anything about FIPE as it's relative new and government is not promoting on this.


Tannet Malaysia is an international consultant firm based in Hong Kong, Shenzhen. We do have over 10 branches in China which I believe we are your best choice for your ASIAN investment. We provide one stop business solution ftom pre-setting up preparation to incorporation, management to operation, market strategics and brand protection and etc. Kindly contact for more information on our other services if you are interested!

 

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