Setting Up A Rep Office And Factory In China

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Setting Up A Rep Office And Factory In China

  1. 1. Setting up a Representative Office / Factory in China Calipe Chong Managing Director www.vipoasia.com
  2. 2. Agenda <ul><li>VIPO Asia Introduction </li></ul><ul><li>Economics status in China </li></ul><ul><li>Opportunities in China </li></ul><ul><li>Business Structure </li></ul><ul><li>General Info </li></ul><ul><li>Q & A </li></ul>
  3. 3. VIPO Asia Introduction A Singaporean-led company operating from Suzhou providing supply chain and management services with our proven track records and expertise in setting up representative offices, manufacturing facilities, joint ventures and sourcing operations. I have 30 years working experience with US companies in semiconductor, consumer electronics, EMS, outdoor power equipment and automotive industries. Actual work experience in engineering, operation, production & materials planning, supplier quality, administration, supply chain, purchasing, sales & distribution and logistics management.
  4. 4. Our Service <ul><li>We provide management services on :- </li></ul><ul><ul><li>Business analysis, reports, site selection, market study, etc </li></ul></ul><ul><ul><li>Coordinating with 3 rd parties to conduct due diligence on Chinese partners </li></ul></ul><ul><ul><li>Business & license registration with various government bodies, bank application , trademark and patent registration, etc </li></ul></ul><ul><ul><li>Drafting of contracts, contractors selection and management </li></ul></ul><ul><ul><li>Project management to furnish office and building construction </li></ul></ul><ul><ul><li>Setting up Sourcing, Operation, Sales, IT, HR and Finance </li></ul></ul><ul><ul><li>Hiring of key personnel, establish labor contract & employee handbook </li></ul></ul><ul><ul><li>Interim management of the organization for 1~2 years before handling over to client </li></ul></ul>
  5. 5. Our Strengths <ul><li>We can do a better job because:- </li></ul><ul><ul><li>We are Asian and we have astute knowledge on the culture, language, business practices and custom </li></ul></ul><ul><ul><li>30 working years with American companies and we have good understanding of their expectations and goals </li></ul></ul><ul><ul><li>Start up a manufacturing facility in Suzhou EPZ </li></ul></ul><ul><ul><li>Actual accomplishment in setting up and managed representative offices in Shanghai and Shenzhen </li></ul></ul><ul><ul><li>Proven management skills to lead strong teams and inspiring staffs to excel </li></ul></ul>
  6. 6. Vision To be a renowned supply chain and management services provider which allow our clients to profit from the economic and competitive advantages in Asia and act as a bridge between East and West.
  7. 7. Mission <ul><li>We want a long term partner relationship with our clients and help to lower their operating cost , enhance their operation efficiency and expansion of their market or manufacturing operation through: </li></ul><ul><li>  </li></ul><ul><li>Set up new factories, representative offices and joint ventures </li></ul><ul><li>Sourcing appropriate, quality and cost effective products and services in Asia </li></ul><ul><li>Incorporating cost effective and efficient logistics management </li></ul><ul><li>Meeting delivery schedules and requirements </li></ul><ul><li>Providing all relevant integrated supply chain solutions and operations </li></ul><ul><li>Marketing or establishing distribution for their products in Asia </li></ul><ul><li>In addition, we also want to be an establishment which we are proud of and envied by clients, peers and competitors for our integrity, ethics, professionalism, efficiency, innovative ideas and high esteem. </li></ul>
  8. 8. China Economy (2008) <ul><li>Third largest in the world after US and Japan </li></ul><ul><li>Nominal GDP is US$4.6 trillion with an average growth rate of 10% since 1978 </li></ul><ul><li>Export and import is US$1,216 billion and US$954 billion respectively (2007) </li></ul><ul><li>Expanding domestic consumption is one strategic priority to stabilize growth and counter current global economic crisis . </li></ul><ul><li>Fast developing automotive industry and tops global car sales </li></ul>Source - http://en.wikipedia.org/wiki/Economy_of_the_People's_Republic_of_China
  9. 9. Opportunities in China <ul><li>Humongous domestic market for the super rich and immense population </li></ul><ul><li>A huge talented and hard-working pool of workers </li></ul><ul><li>Favorable government policies to attract foreign investment fund </li></ul><ul><li>Incentives and preferential treatments from local governments </li></ul><ul><li>Huge and well established supply base </li></ul><ul><li>Superb infrastructure supporting operation and transportation </li></ul><ul><li>World class logistics facilities, network and management </li></ul><ul><li>Test centers to meet worldwide test standards and requirements </li></ul><ul><li>FTA agreement with ASEAN – an added huge market potential </li></ul><ul><li>Favorable incentives for energy saving and green projects </li></ul>“ One cannot complete his global business strategy without considering China factors”
  10. 10. Opportunities in China <ul><li>Energy and Power </li></ul><ul><li>Automotives </li></ul><ul><li>Manufacturing </li></ul><ul><li>Environmental Infrastructure </li></ul><ul><li>Healthcare </li></ul><ul><li>Machinery </li></ul><ul><li>Food and Beverage </li></ul><ul><li>Chemicals </li></ul><ul><li>Luxury Goods </li></ul><ul><li>Merchandized Goods </li></ul><ul><li>Tooling </li></ul>
  11. 11. Representative Office <ul><li>Legal Status : </li></ul><ul><ul><li>No legal personality from corporate </li></ul></ul><ul><li>Purpose : </li></ul><ul><ul><li>Sourcing, Logistics, Customer service, Market Research, Liaison Office with Corporate </li></ul></ul><ul><li>Pros : </li></ul><ul><ul><li>Inexpensive to set up </li></ul></ul><ul><ul><li>No capital requirement </li></ul></ul><ul><ul><li>Exploration of business environment, market and liaison activities </li></ul></ul><ul><li>Cons : </li></ul><ul><ul><li>Complex registration for the size of organization </li></ul></ul><ul><ul><li>Cannot invoice locally in RMB </li></ul></ul><ul><ul><li>Must hire staff from local agency </li></ul></ul>
  12. 12. Joint Venture (JV) <ul><li>Legal Status : </li></ul><ul><ul><li>Legal personality </li></ul></ul><ul><ul><li>Limited liability </li></ul></ul><ul><li>Purpose : </li></ul><ul><ul><li>When restrictions require a local partner </li></ul></ul><ul><ul><li>When sales & distribution channels are best done through local partners </li></ul></ul><ul><li>Pros : </li></ul><ul><ul><li>Use of existing facilities and workforce </li></ul></ul><ul><ul><li>Use of existing sales & distribution channels </li></ul></ul><ul><li>Cons : </li></ul><ul><ul><li>Management compatibility, assimilation and tolerance </li></ul></ul><ul><ul><li>Inheriting staff liabilities </li></ul></ul><ul><ul><li>Risk on losing technology transfer and IPR </li></ul></ul>
  13. 13. Wholly Foreign Owned Enterprise <ul><li>Legal Status : </li></ul><ul><ul><li>Legal personality </li></ul></ul><ul><ul><li>Limited liability </li></ul></ul><ul><li>Purpose : </li></ul><ul><ul><li>Manufacturing operation </li></ul></ul><ul><ul><li>Sales & services </li></ul></ul><ul><li>Pros : </li></ul><ul><ul><li>Full ownership and control </li></ul></ul><ul><ul><li>Security on technologies, IPR and corporate culture </li></ul></ul><ul><ul><li>Convert RMB to foreign currency for repatriation </li></ul></ul><ul><li>Cons : </li></ul><ul><ul><li>Need to fund total investment capital requirement </li></ul></ul><ul><ul><li>Need to learn and adapt local business practices </li></ul></ul><ul><ul><li>Availability of competent and receptive expatriates </li></ul></ul>
  14. 14. <ul><li>Debt-equity Ratio (thin-capital rule) </li></ul><ul><li>The difference between total investment and registered capital could be financed by loans, which could be borrowed from banks, 3 rd parties or shareholders. </li></ul><ul><li>Technically speaking, due to the above debt/equity ratio requirement, the difference between the approved total investment and registered capital provides a cap on the sum of accumulative loans available for an established company. </li></ul><ul><li>In practice, the debt-equity ratio is more relevant for foreign debt/borrowing foreign guaranteed loan purpose and FIE may still borrow domestic loan in RMB in excess to the above cap. </li></ul>The total investment amount represents the aggregate amount of funds or assets intended to be invested in the WFOE over its operating life. Generally, all contributed capital constitutes as registered capital. The difference between the total investment amount and the registered capital constitutes debt, which can be financed by the investors or third party lenders. Please note that according to the relevant PRC laws, the registered capital may not be reduced during the life of the WFOE unless certain conditions are met and such reduction is approved by the approval authority. Total Investment (“TI”) Minimum Registered Capital (“RC”) Less than 3m 70% of the TI Between 3m and 10m Higher of 2.1m or 50% of the TI Between 10m and 30m Higher of 5m or 40% of the TI More than 30m Higher of 12m or one-third of TI
  15. 15. Basic Approval Procedure on the Company Formation Application for the issuance of Approval Certificate Subsequent registrations (tax, customs, forex,etc.) Day 1 Day 50 - 60 Day 90 Business Registration with In-charge government authorities (Business License) Documents Preparation (e.g. AOA, FSR, application letters, etc..) Day 20 - 30 Preparation Approval Registrations Name Registration with competent government authorities <ul><li>Note: </li></ul><ul><li>This is a standard approval procedure required for the company formation in China. </li></ul><ul><li>The approval authority could vary depending on different industries. Nevertheless, the approval from State/local/zone level MOFCOM is required. </li></ul><ul><li>The process might be simplified and speeded up with local government’s proactive support. </li></ul>Application for the issuance of Approval Certificate Subsequent registrations (tax, customs, forex,etc.) Day 1 Day 50 - 60 Day 90 Business Registration with In-charge government authorities (Business License) Documents Preparation (e.g. AOA, FSR, application letters, etc..) Day 20 - 30 Approval Registrations Name Registration with competent government authorities <ul><li>Note: </li></ul><ul><li>This is a standard approval procedure required for the company formation in China. </li></ul><ul><li>The approval authority could vary depending on different industries. Nevertheless, the approval from State/local/zone level MOFCOM is required. </li></ul><ul><li>The process might be simplified and speeded up with local government’s proactive support. </li></ul>
  16. 16. Cash Repatriation Introduction Royalties (Trade mark, Licensing) Non-technical Service Fees (Marketing, administrative services, etc.) Technical Service Fees Dividends Service Cost Sharing Technology Cost Sharing Buy and Sell Interest, Rentals Reimbursements Overseas Parent Foreign Investment Enterprise in China 中国
  17. 17. Creative Industry Park
  18. 18. Dushu Lake Higher Education District <ul><li>Planned area : </li></ul><ul><li>10 sq km </li></ul><ul><li>15 renowned universities </li></ul><ul><li>Over 12000 students </li></ul>
  19. 19. SIP Industrial Technical School <ul><li>Nearly 1700 students </li></ul><ul><li>Implemented courses : </li></ul><ul><li>Digital control technology 、 Application electronics 、 Internet, ect </li></ul>
  20. 20. Suzhou Singapore International School
  21. 21. Residential Development
  22. 22. Let us help you to achieve your goals to set a foothold in China ! Thank You

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