China Business Setup (FIPE) is one kind of company registration in China. Foreign Invested Partnership Enterprise (FIPE) is a unlimited liability business entity without minium requirements on registered capital. A partnership in the People's Republic of China is a business entity governed by the Partnership Enterprise Law passed by order of the President of the People's Republic of China to authorize and govern partnership enterprises. A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested.
Different types of Foreign Invested Partnership Enterprise (FIPE)
Following are different types of FIPE. Commonly,
1. General partnership Enterprise (GPE): A general partnership enterprise may be formed by general partners who bear unlimited joint and several liability for the debts of the partnership. The general partners share unlimited liabilities for the debt of the partnership.
2. Limited partnership enterprise (LPE): A limited partnership enterprise is formed by a combination of general partners and limited partners where the limited partners bear the liabilities for the partnership's debts to the extent of their capital contributions.
3. Special General Partnership enterprise (SGP): A special general partnership enterprise resembles a general partnership except that it must be a professional service institution offering services requiring professional knowledge and special skills. The structure shields co-partners from liabilities due to the willful misconduct or gross negligence of one partner or a group of partners. It is very similar to limited liability partnership in Europe and America.
Advantages of China FIPE
The advantages of establishing a PE, compared with other types of enterprises, include, but not limited to:
1. No corporate income tax for partnership enterprise;
2. No requirements on minium registered capital;
3. Less procedures comparing with Wholly Foreign Owned Enterprise or Joint Venture;
4. Capability of converting RMB profits to US dollars for remittance to its parent company outside of China;
5. Foreign Enterprise or Individual is allowed to establish a Partnership Enterprise with Chinese individual (While Chinese individual is not allowed to have Joint Venture with foreign investor);
6. The profit distribution of a PE could follow an informal negotiated agreement or abide by scheme adopted in the partnership agreement (While for LLC, profit distributions are according the percentage of investment of shareholders)
Foreign Invested Partnership Enterprise (FIPE) is a good way for foreign investors since the low requirements and easy process. A partnership requires a written agreement between the partners. This written agreement must be submitted to the State Administration of Industrial & Commerce along with the certified passport copy of the partners.
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