Setting up Business in China
Summary of processes for ROe and WFOE
Step 1: Get the necessary documents in place. Documents include among others, Certification of incorporation, Bank credit letter, Appointment letter, Authorization letter of signatories, Articles of incorporation and Leasing contract.
Step 2: The documents should be notarized and in Chinese language.
Step 3: It takes about 1 to 2 months of processing time before approval is granted.
Step 4: There is a need for a 1 year [some places – 6 months] leasing contract in place prior to submission of documents for approval.
Step 5: The process for setting up the business in China include among others, applying for a business license, registering the company seals, applying for an organization code certificate, applying for tax registration certificates, opening of a bank account and handling statistics registration matters.
Step 6: The major differences between a RO and WFOE are:
- Time for RO approval is shorter than that of WFOE.
- Duration of operations approved is 3 years for RO and more than 20 years for WFOE.
- No minimum capital is required for RO while registered capital is required for WFOE.
- RO is not allow to issue invoices [i.e. no sales] while WFOE is allowed.
- RO is not allow to hire staff on its own while WFOE is allowed.
- RO tax is based on expenses while WFOE tax is similar to those ordinary companies.
Step 7: Different industries [service, trading or manufacturing] have different requirements.