China

China is the largest country in the world with a population of more than 1.35 billion. Since the introduction of economic reforms in 1978, it has become the world's fastest-growing major economy. As of 2013, China is the world's second-largest economy, and is also the world's largest exporter and importer of goods.

With such economic potential on Hong Kong’s doorstep, KAYRO are accomplished in incorporating a business in China, which is still a complex procedure with numerous bureaucratic obstacles that are, unfortunately, the norm. There are two typical methods for an enterprise to set up their company in China:

  • A Wholly Foreign-owned Enterprise (WFOE)
  • A Representative Office (RO)

When we help establish a WFOE, our clients achieve greater efficiency in the development and running of their business, as it is an independent legal entity with the capability of carrying out trade and sales. With an RO, this structure is relatively simpler to set up compared with a WFOE. However, an RO is limited to business co-ordination, marketing and research, which means a company it is not allowed to directly engage in operational or sales activities. At KAYRO, our competent experts can help clients identify their specific needs in accordance with their business plan and suggest an appropriate structure to best suit their strategy. Each of the incorporations in China is handled by a dedicated and experienced team of professional partners, who are focused solely on their client.

The WFOE

In the past few years, the WFOE has become the most popular form of enterprise in China. This may be due to the growing confidence of foreign investors in the Chinese market. The establishment of a WFOE brings many advantages. One benefit is that it can be operated by one person, without the need for a Chinese partner. Therefore, foreign investors can completely determine the activities of the WFOE and use their discretion in business decisions. The WFOE is governed by the laws and the Company Law of China.

There are many administrative steps necessary to set up a WFOE in China. These steps are not only very expensive, they take a long time to complete. The process can become difficult and a bureaucratic headache for the uninitiated, but KAYRO have extensive connections in the mainland – people experienced in handling the red tape.

The cost of incorporating a company in China is determined on the business model of the WFOE and its capitalisation.

Consulting WFOE

16,000 USD ~ 80,000 USD

Service WFOE

16,000 USD ~ 80,000 USD

Hi-Tech WFOE

16,000 USD ~ 80,000 USD

Trading WFOE / FICE/ Retail

80,000 USD ~ 160,000 USD

Food & Beverage WFOE

80,000 USD ~ 160,000 USD

Manufacturing WFOE

<160,000 USD

 

For the establishment of a limited liability company in China, the minimum capital investment is approximately US$5,000.

The taxes in China are much higher compared with Hong Kong.

Corporation tax

Individual  income tax

Value-added tax

25%

5% - 45%

ca. 17%

 

The Representative Office (RO)

The establishment of an RO in China has disadvantages, which result from the fact that companies cannot be for-profit structures and an RO is only suitable for business co-ordination.

In such cases, KAYRO may not be able to provide the service ourselves, but can duly assist clients by connecting them with an appropriately experienced and dedicated partner we trust, who is at your side when setting up a business in China, and will advise you according to your wishes. For further information feel free to contact us.