Special Economic Zones (SEZ) in China


Special Economic Zones (SEZ) in China
Special Economic Zones are where the policies were put in place and actioned by China Authorities for the purpose of attracting overseas investments to seek modes of entry to China and trade in the China Market as well as to create China business opportunities for small businesses. These are the areas that overseas investors invested in and would enjoy government support policies like tax free, free of land supply, etc. Shenzhen was an early SEZ which attracted Hong Kong factories to move to Shenzhen areas, and engage in manufacturing activities. This is important to know when looking into how to enter the Chinese market. Most importantly, for a new business in China.

Company establishment in China for China market entry strategy.
Knowing how to enter the China market, establishing a presence in China and finding out what business opportunities there are in China is still a challenging experience for overseas organisations along with finding a mode of entry into China which can be difficult, however with our experience and expertise we can show you how to enter the Chinese market, trade in the China market, help create a China market entry strategy in a smooth way for prospective market entrants (we are experts in China company/business registration) and help you create China business opportunities for your small/large business. China has three recognised forms of business organisations available to foreign investors who wish to register their companies; these are a Joint Venture, Wholly Foreign-Owned Enterprises (WFOE) and Representative Office. Each are a marketing strategy for China.

Joint Venture (JV) – China Market entry

One of the ways to enter the Chinese market and trade in the China Market is through a Joint Venture, which is a business arrangement in which the participants create a new business entity or official contractual relationship and share investment and operation expenses, management responsibilities, profits and losses.The Chinese authorities encourage foreign investors to use this China market entry strategy to form a company in order to obtain exposure to advanced technology and new management skills. In return, foreign investors can enjoy low labor costs, low production costs and a potentially large Chinese market share. Joint Ventures are sometimes the only way to register in China if a certain business activity is still controlled by the government, for example restaurants, bars, building and construction, car production, cosmetics etc.

Wholly Foreign-Owned Enterprise (Setting up a WFOE in China) – China Market Entry Strategy
Quick question: What is a WFOE? How can I set up a WFOE in China? What is the cost of setting up a WFOE? A way of how you can enter the Chinese market and trade in the China Market is by a wholly foreign-owned enterprise (WFOE) which is a business entity formed in China entirely with foreign capital. This China market entry strategy is totally under foreign control and does not have any formal Chinese ownership or participation. For a foreign company to be able to issue receipts and export goods from China, it must be legally registered as a local company or a WFOE. A WFOE is set up as a limited liability entity and represents separate legal persons and is taxed according to local legislation. WFOE can generally control their own governance through the articles of association and the normal minimum paid up share capital starts from ten thousand RMB. Many foreign investors find this type of company attractive because of the full control and 100 percent ownership. A good China market entry strategy! Thinking of setting up a WFOE in China? We can help.

Representative Office – China Market Entry Strategy
The simplest and most cost-effective China market entry strategy to enter the Chinese market and also trade in the China Market and establish a useful business presence in China is the Representative (rep) Office. The choice for an initial Rep office will normally be determined by basic market and product research in China. The high-profile cities of Shanghai, Beijing, Guangzhou, and Shenzhen are the most likely choices for a Rep office. It should be noted that more than one Rep office can be established in China by a foreign entity. A Representative Office is an entity involved in business activities, which does not result in direct profits being made by the office. They are not allowed to operate as partnerships or sole proprietorships in China as they are not recognized as legal persons. However, they are allowed and encouraged to conduct ‘indirect operational activities’ such as liaison for business purposes, introduction of products, market research and technology exchange. These activities should be preparatory and supplementary activities, market research on the local market, providing business information and supplying sales for the headquarters. The foreign enterprise applying for the Representative Office must be legally registered in its country of origin for at least 12 months.