Many foreigners want to set up a company in China with the fast development of economy of China. Before you do this, the following factors should be considered.
Registered Capital
According to Corporation Law (revised in 2005), the minimum registered capital of a limited liability company shall be RMB30 thousand. The minimum registered capital of a shareholding company is RMB5 million. For the registration of a foreign company, the registered capital should follow China’s “Corporate Law”. The “Corporate Law” states, the registered capital of the company whose major business is production and operation cannot be lower than RMB 500,000 YUAN; the registered capital of the company whose major business is commodities wholesale cannot be lower than RMB 500,000 YUAN; and of the company whose major business is commodities retail cannot be lower than RMB 300,000 YUAN; and the registered capital of this kind of companies whose business is science and technology development, consulting or service cannot be lower than RMB 100,000 YUAN.
Examination and Approval Authorities of Establishment of Foreign Enterprises
According to the country’s laws and regulations, with the establishment of foreign enterprises, the government practices the system of examination, approval and registration by item. Investment sum and project classification under the Directory of Foreign-Invested Industries serve as major basis for the examination and approval authorities of local and central governments. For details, please refer to the Project Approval and Establishment Examination and Approval Procedures.
Issues Regarding the Definitions of Stipulations about Merger and Division of Foreign-funded Enterprises
According to the Interim Administrative Methods for Examination and Approval of Foreign-invested Projects, the State Development Planning Commission shall be responsible for the approval of encouraged projects with over (including) US$100 million investment, and allowed foreign-invested projects and restrictive foreign-funded projects with a total investment of over (including) US$50 million, for the Ministry of Commerce to examine and approve. Of those, encouraged projects with over (including) US$100 million investment, and allowed foreign-invested projects with a total investment of over (including) US$50 million, shall be submitted to the State Council for approval by the State Development Planning Commission and the Ministry of Commerce.
Forms of Foreign Invested enterprise
Chinese-Foreign Equity Joint Ventures
Chinese-Foreign Equity Joint Ventures
Chinese-Foreign Equity Joint Ventures anew also called as Share Company with Foreign Investment. They are enterprises jointly established within Chinese territory companies, enterprises, and other economic entities on the other side. An equity joint venture shall be invested and operated jointly by both foreign and Chinese investors, who shall share the profits and losses, as well as risks, in proportion to their respective shares in the registered capital. Chinese-Foreign Equity Joint Ventures are Limited Liability Company, and possess the status of Chinese legal person.
Chinese-Foreign Contractual Joint Ventures
Chinese-Foreign Contractual Joint Ventures are enterprises jointly established within Chinese territories by foreign companies, enterprises, other economic entities of individuals and Chinese companies, enterprises or other economic entities, according to their cooperative conditions. The both parties to a contractual joint venture should prescribe in the contract their respective conditions, lights, obligations, incomes distribution, responsibilities for risks and debts, the company management and negotiations on the property transaction at the expiration.
When establishing China-Foreign Contractual Joint Ventures, the foreign party provides land, factory buildings, certain usable machines and facilities, and in some cases a certain amount of capital as well. Chinese-Foreign Contractual Joint Ventures may posses the status of conventional person or not.
Wholly Foreign-Owned Enterprise
Wholly Foreign-Owned Enterprise is invested entirely by foreign companies, enterprises, other economic entities or individuals within Chinese territory in accordance with the related Chinese laws. Wholly Foreign-Owned Enterprise usually takes the form of limited liability companies, and do not include the Chinese Branch of foreign company or other economic organization.
Share Company with Foreign Investment
Share Company with Foreign Investment are stock limited companies set within China’s territory by foreign companies, enterprises, or other economic organizations with Chinese companies, enterprise or other economic organizations, which is established according to the principle of stock. All principal of Share Company with Foreign Investment is made up of equal amounts of stocks, every stockholder would take certain responsibility for company in accordance with his amount of stocks, and the company is responsible for debts with all estate.
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