Profit Repatriation
How and how much a Foreign Invested Enterprises can repatriate profits of their business in China is a major concerns of investors. This is mainly due to two reasons, the first of which is that the Chinese currency is not free-transferable in the world and the Chinese government has strong control over the exchange between RMB and other currencies. The second reason is there are many rules and regulations relating to transfer the profits to outside of China. The regulations consist of special approval and implementation procedures which are difficult to understand for foreign investors. Additionally, the rules and regulations are regularly changed by both central and local government.
This issue of profit repatriation needs to be considered and advised on starting from the initial structuring stage of a business in China. It should be ingrained to the business forecast as well as tax planning scheme. We understands the detailed and updated procedures in repatriating profit from China and have the ability to establish contacts and negotiate with the authorities in order to get profit repatriated at lower cost.
Exit Strategy
Like every where in the world, foreign investors are normally given a warm welcomed to a country or a city. This occurs particularly in China, with the booming economy. However, this makes the foreign investors, especially SMEs which do not have experience in investing overseas, focus on how to enter the market.
As a professional firm, we strongly advise foreign investor to also think of the exit strategy, before injecting capital. To exit from this market is much more difficult than to enter it, from both a time and money perspective. Take Representative Office (RO is the simplest structure) as an example. To establish a RO normally takes 2 to 3 months. To close an RO however, will take a minimum 3 months and easily take up to as long as one year. Additionally, the costs for the investor in the closing process will be much higher than the set up process.
We provide advice in exit strategy from China in consideration of, but not limited to, the investment plan, business structures, PRC laws, local tax bureau regulations and requirements on the exit.
Business Establishment
After completing the planning and structuring process of a China operation, foreign investors come to the final stage of the legal registration. As the process of registering a business in China is much complicated and bureaucratic than other countries, it worth while to receive help in processing the application.
There are three stages to register the business in China:
Stage one is getting approval from local office of MOFCOM (Ministry of Commerce). This involves approval of a feasibility study including, but not limited to, name of business, scope of business, registered/total capital, and business structure. For a manufacturing company, it will also include an environmental assessment. After MOFCOM has review all application documents for the set up and does not request additional support, an Approval of Certificate will be issued.
The second stage is to obtain the business license. Base upon the approval from MOFCOM, the local Industry and Commercial Bureau will look through the same set of application documents and if complete, will issue a Business License. From the date of the Business License the company legally exists. However, in order for the company to operate the business it has to go through the last stage of post registration process.
The post registration including, but not limited, to tax registration, customs registration, finance registration, opening bank accounts and statistic registration. Some of the registrations can not be performed at the same time, as some cannot be completed prior to others.
We have the experiences and can assist with the entire business application process.