Guide to incorporate a company in Hainan is useful for those investors who are going to set up a business in this promising island. On October 16, the central government rolled out a general plan for the Hainan pilot free trade zone, with the ambition to build the province into a high-standard free trade hub by 2020 in terms of openness, investment convenience, legal environment and financial services. It is no doubt Hainan is a lucrative market for foreign investors and startup companies. However, Before business setup, it is important to figure out which kind of business vehicle is the most suitable for you.
Wholly Foreign Owned Enterprise (WFOE)
To own physical assets and hire human capital within China, WOFE is the best option for you. There are three types of WFOEs—manufacturing, consulting and trading.
The setup cost and WFOE requirement will differ for each sector. However, establishing a WFOE requires registered capital of around RMB 100,000 - RMB 500,000.
Although setting up a WFOE is an extensive process, it provides more control over business operations, tax subsidies, access to large talent pool, and ability to transfer money to the parent company.
Joint Venture (JV)
For local support and information and technology sharing, joint venture is an ideal option. Joint venture is a commonly used foreign invented enterprise. It provides access to restricted sectors and offers considerably easier setup process. Develop a comprehensive partnership contract stating capital and profit sharing guidelines. Most importantly, verify the Chinese business registration number to ensure that you’re dealing with a legitimate business.
Representative Office (RO)
This type of business entity has multiple restrictions, however, it’s the easiest form of business representation in China. Representative office can’t receive payments from corporate clients, on behalf of the parent company. And it needs to transfer money from abroad to pay daily expenditure. Even though a representative office has no source of profit, the Chinese government still required ROs to pay taxes.
Hong Kong Company
Setting up a company in Hong Kong is relatively easier than other investment options. The registration requirements and procedures are quite simple. Hong Kong has a sound legal framework and corporate law structure that facilitates foreign investment. One of the benefits of setting up a limited company in HK is zero tax policy.
Tannet’s Services in Hainan
Market Research/Feasibility Study/Due Diligence;
Company Formation (WFOE/JV/RO/HK company);
Accounting, Tax Filing and Auditing;
Bank Account Opening (HK account/offshore);
Work Visa/Residence Permit Application;
Intellectual Property Service (trademark, patent, copyright);
Global Barcodes Application;
Company Deregistration/Cancellation/Dissolution.
Before venturing into new market, learn about local trends, consumer behavior, corporate culture and regulations, business dynamics and other pertinent information regarding operating a business. Conduct market research and develop a comprehensive business plan is of great importance. Should you need any assistance, Tannet’s local professional team is glad to help.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
Previous：Hainan Visa-free Travel
Next：Hainan Company Establishment: Functions of Articles of Association