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| Partnership Enterprises Registration In Wuhan China |
Wuhan, the capital of Hubei province,is the most populous city in central China. In 2015 it has a population of 10.60 million residing in three distinct districts (Hankou, Hanyang, and Wuchang), commonly known as “The Three Towns of Wuhan”. The city is recognized as the political, economic, financial, cultural, educational, and transportation centre of central China.
While Wuhan has for decades been a traditional base for manufacturing, it has also become one of the areas promoting modern industrial change. Wuhan consists of three national development zones, four scientific and technologic development parks, over 350 research institutes, 1,656 hi-tech enterprises, numerous enterprise incubators and investments from 230 Fortune Global 500 firms – enabling the city to offer globally competitive strengths in most business fields. By combining traditional industries such as automobile manufacturing, the starting point of China's economic liberalization, with new hi-tech industries in places like the Optics Valley, Wuhan is positioning itself as one of the most progressive business cities in all of Asia.
For more information about Wuhan, please
visit https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/international-business/csg-china-research-report-on-investment-environment-of-wuhan-en-2013.pdf
The investment vehicle of foreign-invested partnerships (FIPs) is usually described by the press as the third pathway to China. FIPs have been possible since 2010, which meant new possibilities for investors that were formerly disadvantaged or unable to use traditional legal structures.
In Mainland China, 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 start ups in China as it requires no registered capital but the FIPE still could hire people, collect payments, issue invoices, apply for work & residence in China freely. It's not a surprise that most people you meet in China may not know anything about FIPE as it's relative new and government is not promoting on this.
The purpose of allowing FIPs is part of China’s current five-year plan, whose targets are to bring more foreign management and technology know-how, and increase the Chinese economy’s productivity and net added value. The Chinese government is not in pursuit of increasing foreign capital because rich Chinese companies already exist, such as Lenovo, ICBC and Sinopec.
The advantages of FIPs are:
•flexible capital injections
•no quotes for cash;
•no quotes for non-cash benefits;
•no quotes for IP rights;
•no minimum registered capital;
•no timeframe for capital injection.
The Renminbi can be used as registered capital since the State Administration Foreign Exchange does not impose any limitations. The parent company is not obliged to finance the partnership and services can be assessed in monetary terms and are therefore usable as capital (for ordinary partnerships). Additionally, the foundation process is not very time consuming since registration at the local chamber of commerce is sufficient; approval from the Ministry of Commerce is only necessary if the company performs within a ‘restricted’ business scope.
Other advantages when operating such a partnership are:
•no corporate income tax (a partnership is an unincorporated enterprise);
•flexible management structure;
•flexibility in announcing/denouncing partners because no approval of all partners required, 30 days notice period sufficient;
•direct hiring of employees;
•flexible profit distribution.
Sino-foreign partnerships can be either partly Chinese, in which at least one partner has to be Chinese and where the partner can be a Chinese company or natural person, or partly foreign, in which at least one partner has to be foreign and where the partner can be a foreign business or natural person.
FIPs that are 100% foreign partnerships consist only of foreign partners. The partners can either be natural persons or companies of any form.
Although legislation covers all stages of an FIP, FIPs are still at the initial stage of development. Thus, some tax and accounting issues are not yet fully clear and firms are often unsure how to proceed. Moreover, the regulations vary from region to region. The difference is obvious when comparing Special Administrative Regions to Mainland China since in those regions all tax and accounting related questions for FIPs are cleared and regulated.
Condition(s) of establish FIPE in China
A partnership enterprise must meet the following requirements:
1. At lease 2 or more partners
2. A written partnership agreement;
3. Capital contribution subscribed to or actually paid by the partners;
4. A business name and an office in an office building for the partnership enterprise;
Documents required
1. Corporate investor as partner: Certificate of Incorporation, or Articles of formation or equivalent document certified by Chinese embassy or Chinese consulate overseas For individual investor as partner: Passport copy be certified by Chinese embassy or consulate
2. Residential Address Proof (e.g. utility bill issued within 3 months, valid driving licenses with address, National Identity card with address, etc.) be certified by Chinese embassy or consulate
3. Bank Reference letter be certified by Chinese embassy or consulate (Managing partner only)
4. Passport copy of: (i) Parent company's director (ii) China Partner Enterprise's general partner and (iii) China Partner Enterprise's partners China general partner and partners provides: 6 photos (2 inches size), brief resume. Registered capital; Business Scope; 8 proposed Chinese names of China business Office address in China, leasing contracts, certificate of real estate ownership, and landlord identification
GENERAL TAX INFORMATION
No corporate income tax required. The partners shall pay their respective share of the partnership income.
PROFIT REPATRIATION
China Government allows Foreign Invested Parnter Enterprises remit their profits out of the country and such remittances do not require the prior approval of the State Administration of Foreign Exchange (SAFE). Dividends cannot be distributed and repatriated to oversea if the losses of previous years have not been covered while dividends not distributed in previous years may be distributed together with those of the current year. Repatriating the Registered Capital to home countries is forbidden during the term of business operation.
Tommy China Business Consulting has direct connections in the local government, Since 2006, TCBC has been focusing on consulting services for our clients to invest in Wuhan China. Foreign Invested Partnership Enterprises (FIPE) Setting Up in Wuhan is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls
For more information, please visithttp://www.tommyconsulting.com
Email: tomlee@tommyconsulting.com, Skype: tomleeli
WhatSapp/Wechat/Cell Phone: +86 18926401128
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