Sino-Foreign Cooperative Joint Venture Companies Registration in Shenzhen

With the opening-up and development of the mainland China, more and more enterprises come to register companies in Hong Kong and overseas countries as a testing ground to win overseas market. Then, based on the testing ground company, they invest in the mainland aiming at setting up Sino-foreign joint ventures, enterprises with Sino-foreign cooperation, and wholly foreign-owned enterprises and forming the pattern of having stores in front and factories behind, which can not only enhance the corporate image and win the trust of overseas customers, but also can enjoy the preferential policies of China. From the point of view of foreign investment, the advantages of setting up foreign-owned enterprises are:

1.You can share resources and complement each other’s advantages;

2.You have the right of self-care customs declaration, which can provide privileges for you in equipment and goods import and export;

3.According to the law of China, “Any enterprises with foreign investment of a production nature scheduled to operate for a period of not less than 10 years shall, from the year beginning to make profit, be exempted from income tax in the 1st and 2nd years and allowed a 50% reduction in the 3rd to 5th years.” This preferential policy applies to your corporate income taxation;

4.You can start to do business and issue the invoice Income Tax of RMB and accept RMB as your income without all those restrictions imposed on representative offices;

5.You can take advantage of Chinese resources directly and get a head start over other companies;

6.You can change your profits in RMB to dollars and remit to your overseas parent company.

What is Sino-Foreign Cooperative Joint Venture Company?

A Sino-Foreign Cooperative Joint Venture (CJV) is a joint venture between a Chinese and a foreign company within the territory of China. The Chinese company usually provides the labor, land use rights and factory buildings, while the foreign company brings in the necessary technology and key equipment, as well as the capital. The joint venture is based on a cooperative joint venture contract in which matters like the terms of cooperation, the division of earnings, the ownership of property upon the termination of the contract term of the CJV, the sharing of risks and losses, etc are laid down. The foreign investors could be foreign corporations (including Hong Kong, Macao and Taiwan), individuals or partners, but Chinese investors must be corporations, not individuals.

Company Name
In China, there are restrictions imposed on company name. In the same trade or business, neither company name nor trade name could be duplicated. Generally, the name consists of the four following parts: administrative division (e.g. Shenzhen), trade name (e.g. VINI Group), industrial characteristics (e.g. Business Management) and organization form (e.g. Company Limited). The name is not available until is verified and reserved by the administration for industry and commerce. There are many factors you need to consider when you name your company:

1.You are required to go to city-level units for endorsement if your company’s name has words like prefecture-level city;

2.If your company’s name has words like provincial level, you are required to be endorsed by provincial level units;

3.Names with the word China are needed to be endorsed by the Ministry of Commerce of China.

Registered Capital and Paid-in Capital of Sino-Foreign Cooperative Joint Venture Companies

The minimum registered capital needed for Chinese companies is RMB 30,000 Yuan. The requirement of the registered capital is different according to companies of different properties. The registered capital can be prepared within 6 months since the business license is signed. You can also prepare the registered capital by installment in 1-2 years. If you choose payment by installments, you are required to pay 20% of the registered capital in three months, the rest by installments. The specific fixed number of years is decided by how much the registered capital is.
The registered capital must be prepared according to the company ordinance, which is required by Regulations of the People’s Republic of China on Administration of Registration of Companies and Law of Foreign Investment Enterprises of China.

The Scope of Business

This refers to the specific business transaction of the foreign invested companies want to operate in Shenzhen. The business scope of Shenzhen company is directly restricted by its company name and registered capital. The more the registered capital is, the broader the business scope is. The business scope of Chinese companies is getting broader and broader since China entered the WTO.
Operating Process

1.Process of Consignation
 Sign the trust deed (for confirmation)—hand in all the needed materials—effect the payment—data auditing—complete the documents of application—sign the documents—hand in the documents to the related departments of government by sequence—notify the process—complete in about 20 to 60 working days—inform the customers to receive the documents—accept and sign the documents

2.Operating Process of Customers
  Affirm the subject of investment (corporation or individual)—records of both parties’ board of directors or investors meeting—both parties sign the joint venture agreement—lawyers notary of foreign investors and get endorsed by the designated Chinese government bodies—offshore company bank credit certificate—determine the company name—determine the scope of business—determine the registered capital—determine the shareholders—appoint legal representative of Chinese companies—determine the location of office in China, sign the lease contract (you need to consider the necessary factors such as fire control and environment protection)—entrusted to handle—remit the invested money to the capital account under the name of the investors (specify the amount of investment)—verification of the capital (if it is needed)

3.Government Handling Process

Check whether the company name is available (1 working day)—Affirm the name and handle the pre-endowed code (1 working day)—Application for approval of foreign enterprises (5 to 8 working days)—Handle business license—Carve official seals—Handle the organization code certificate—Handle the domestic revenue and local tax( 1 working day)—Handle the foreign exchange card—Open capital account for foreigners (7 working days), open the capital verification account for Chinese (1 working day)—Foreigners, Chinese remit the registered capital—Issue the capital verification report (1 to 2 working days)—Application for change of business license (3 to 5 working days)—Change the domestic revenue certificate and local tax certificate (1 to 2 working days)—Open the basic account of joint venture company (15 working days)—The new company is set up.

Materials Needed for Sino-Foreign Cooperative Joint Venture

Foreigners Invest in the Form of Foreign Enterprises
The information the foreign companies need provide:
1).Board meeting minutes or resolution originals
2).Companies’ bank credit certificate (2 original duplicates) issued by the overseas bank, to be translated into Chinese
3).Offshore company official seal (prepared for the application materials need to be stamped)
4).The original notary and certificate of the materials for setting up the company; foreign companies are required to submit a full set of information to Chinese Ministry of Justice to do the certification. Foreign companies in China need to provide the pre-signature of local Chinese embassy (consulate).
5).If the company has been established for more than a year, a copy of the audit report in Chinese version is required.
6).Copy of foreign company’s certificates.

The information the Chinese companies need provide:
1).Board meeting minutes or resolution originals
2).Copy of business license
3).A copy of the latest annual audit report of Chinese companies (it is required if the company registration has been completed for more than a year.)
4).Official seal of Chinese company (prepared for the application materials need to be stamped)

The information both parties of the joint venture need provide:
1).Determine the joint venture name
2).Determine the registered capital and business scope of the joint venture
3).Feasibility report
4).Articles of association, joint venture contract
5).The proposed chairman, board members, supervisors, managers, valid ID copy, the legal representative’s original valid proof of identity, 2 inch color
6).2 copies of the original lease contract or own real estate license;
7).Other information required by government departments

Foreigners Invest in the Form of Individuals

1).The foreign investor’s original duplicate of notarized documents
2).Companies’ bank credit certificate issued by the overseas bank in duplicate
3) For other information, please refer to "foreign enterprises in the form of foreign investment"

Transaction Content

1)Project Approval; 2) Articles of association, joint venture contract; 3) Foreign-invested enterprise approval certificate; 4) Original duplicate and a copy of the business license; 5) Official seal, financial seal, customs seal (if it is required), the personal seal of the legal representative; 6) Carving registration card; 7) Open the account permit, seal cards, open/cancel the account confirmation; 8) The code card, the original duplicate and a copy of organization code certificate; 9) The original duplicate and a copy of tax registration certificate, the registration form and notice of taxes approved; 10) Foreign exchange registration certificate and the approved foreign exchange business documents; 11) Foreign trade operators registration form (if it is needed); 12) Open capital account; 13) Customs registration certificate (if it is needed)

Transaction Time

Production type: 65 to 85 working days or so to complete. (Starting from the date of environmental protection, fire control and hygiene approval, the specific time is based on the actual type of business.)
Non-Production type: 60 to 80 working days or so to complete.(The specific time is based on the actual type of business.)
Follow-up Services
1.Issue the capital verification report
2.After the registered capital is in place, renew the business license
3.Bookkeeping and tax reporting: tax reporting to the state tax bureau from the month the tax registration certificate is issued.
4.Audit: Foreign-owned companies conduct an audit each year.
5.Annual returns: foreign-owned enterprises must go to the relevant authorities for inspection and approval procedures form March 1 to June 31 of every year.
6.Apply for general taxpayer
7.Change the business information
8.Work visa
9.Office lease
10.Financial and tax planning (for details on Chinese tax, please see Instructions of Chinese Tax Service)

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