Paul, the procedure you described looks more like setting up an agent or representative office in China to act on the behalf of a foreign company. I know quite abit about this part despite having been to China yet. Because i know people personally who have made it, and i also have eventual personal plans to do so. Figures might appear sky high, but i can give plenty of sources that would confirm. Or just use Google and you will find its correct.
As a foreigner you can set up shop for 4 different kinds of businesses forms. Depending on what you will do. Foreign companies still have lower taxes i think around 22 or 23% today whereas the Chinese pay 33%. The tax ease on foreign investers was as low as below 20% but is gradually going up every year and should be on par with the Chinese in 2015 i think.
However only 2 of these would apply to most if you start from scratch. The other forms are similar to office/rep or subsidiary.
Ofcourse, these rules do not apply if a Chinese citizen starts a business. But for a foreigner this is what i know and i just had to recheck again if anything has drastically changed this year but cant find it has. This is in regards for setting up the equivalent to a LTD.
If you are gonna do business with clients outside of China but run your operation from within China. The minimum amount you will have to shell is 500.000RMB. Yes, 0.5mil. If your company will have its own production the figure is 1 million RMB. That covers all registration fees , minimum share deposit and necessary investments to have your LTD company on paper. The registration process and all forms are many. And the process time for a foreigner are often quite long. You hire someone to do the dirty work or you will get lost.
If you are exporting goods as a foreigner you also need an export license.
Second choice is if you intend to only do business inside China. But still register as an LTD. Its abit cheaper but still alot of Yuans.
Remember however, the cost is not a pure investment. A great part also stays in the stockshare.
A much easier and cheaper way to start an LTD (I would not recommend any other flavour then LTD unless ur willing to stand as personally economically responsible ifg things go sour). Is Hong Kong
China did not enforce the mainland taxes and regulations on the HK business market and it seems quite unlikely they will any soon. Hongkong is one of the few accepted offshore countries that are not under OECD investigation together with Sychelles and Panama. Even though Hongkong would seem much similar to the offshore tax paradises it is not regarded as one.
The great difference in Hong Kong is that company tax is territorial. And the tax is still low at 16.5%. With territorial means you ONLY have to pay tax on activities that takes place in Hong Kong. You only pay tax on the net profit. Interest rate profits etc are taxfree. The minimum amount of stockshare is HK1$. The process takes about 15 days if you have all papers in order. Few steps you have to make if you want your LTD solid however. Quickest route is to have a professional Consult Agency do all the work for you, thats what my former colleague did. That would sum up like:
Establishment: 1900€
Add 500€ for a corporate bank account with HSBC Hong Kong.
Add 900€ for an anonymous director & shareholder solution. This is done by setting up an anonymous Belize Holding Corporation which you own and control solely. The Belize Holding Corporation is then the shareholder & director of your Hong Kong Company.
Add 600€ for a virtual office that includes mail forwarding, a local shared phone number answered by a receptionist, and a local shared fax number.
OR
Add 1300€ for a virtual office that includes mail forwarding, a unique phone number answered by a receptionist in your company name and a unique fax number.
Thats pretty much it in short words. And perfectly legal. But then, you need to learn and understand how to run business in Hong Kong too. U have to do all the taxpapers and reports once a year. I would recommend you hire someone to do it for you properly.
However, if u wanna sell goods from HK into mainland there have been some changes from what i have heard and those i am not up2date with yet.
If anyone needs more detailed info just ask, if i cant answer specifically i know people who can.
Also, i dont know if these rules would differ any if u were married to a chinese citizen per say. Those are unknowns to me and above is solely based on you being a foreigner who wants to establish yourself in the region.
There might be lesser forms of business to establish much cheaper but without any security. But official documents in English regarding these i have never seen.
And sure, i know alot of people who do overseas business privately in not just China but Thailand and Vietnam too. But then you are a villain in the eyes of the Govt and i doubt most of you would want that is s*it happens.
Noteworthy, most companies establish in the eastern region which has 63%+ of all new companies since 2008.
And yes.. im new here. Hello
.. God knows why i was reading and posting on the hideous forum on the main site and didnt go here straight away.
I *might* have plans to look into setting up shop later and have investor too if the idea seems doable and profitable. But i will first have to actually go there, which i might for a period of 6 months. I will make a post about that in another section where i would be grateful to get some feedback for those with more experience.
