WFOE

China issues Draft Foreign Investment Law transforming foreign investments regime

China’s Ministry of Commerce released a draft of a new Foreign Investment Law for public comment on January 19, 2015. If the Law becomes adopted, it will have a strong impact on the regime for foreign investment in China; it will reduce barriers to foreign investments, enhance transparency and control the regulations in restricted industries.

Overview of the major changes

WFOE set-up in the Shanghai Pilot Free Trade Zone

Wholly Foreign-Owned Enterprise (WFOE) is, by far, the favorite entity for foreign investors looking to set up a company in China. Representative Offices may offer cheap and easy way to feel Chinese trends, Joint-Ventures may give you a privileged access to the market, but WFOE are the only way for a foreign investor to have full control on its operations in China. And where else than in Shanghai would you set up a WFOE? Since the launch of the Shanghai Pilot Free Trade Zone (SHPFTZ) last September, new opportunities for foreign investors are arising in the city.

Representative Office Incorporation in China

Representative Offices (RO) are the cheapest, fastest and easiest way to incorporate in China, compared to WFOE and JV. However, such advantages come with several weak points you should be aware of before choosing to set up an RO. Let’s have a closer look at their characteristics:

Investing in China: Be careful about the Variable Interests Entities

About a half of Chinese companies listed in NYSE and NASDAQ are using Variable Interests Entities so as to avoid the restrictions over foreign investments. While they are a very good way for foreigners to benefit from Chinese companies’ rapid growth, major risks loom, threatening foreign investors’ ability to exercise their shareholding rights on the Chinese company. In this article, S.J.Grand offers you an overview of the VIE’s advantages and drawbacks.

How to avoid the Cash Trap?

Strategies to repatriating profit from China in 2014

Updates on Shanghai Free Trade Zone

After 8 months since its launch, in September 2013, the much-acclaimed FTZ is now raising more and more concerns about its effectiveness and key role in fostering trade and providing concrete measures for it. Many innovations still seem more theoretical than pragmatic. If in the very first months after its launch this could still leave space to the ambition and optimism of government officials now this mood is starting to creek under the growing urgency for more concrete implementations.

Due diligence in China: Why is it better for foreign companies to outsource?

Roadblocks that foreign investors are challenged with

Language barrier

The Chinese language has always been an obstacle for many foreigners who want to do business in China. The majority of the foreign investors do not speak Chinese and few Chinese people speak English. Foreigners ought to depend on translators and still there is a great risk of misunderstandings.  

Complex legislations

China moves to allow Health Care WFOEs

--PRC government hopes opening will improve national healthcare--

The Chinese Government has moved to open the domestic healthcare industry to greater foreign investment, by allowing WFOEs to run private hospitals, China Law Blog reports. Previously, foreign companies in the healthcare industry were limited to joint ventures and were unable to have singular ownership.

Representative Offices: Understanding New Regulations

TAX BRIEF -- JANUARY 2011

IMPORTANT NOTE: New regulations come into force from March 1st that could require you to change your business structure. If you operate a Representative Office, contact S.J. Grand for an obligation free appraisal of your situation.

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