Frequent Asked Questions and Answers

Q1: How long would the entire process take?

The whole process shall basically take you around three months, and the business scope you applied will be an important factor.

Q2: Can I register on my own as a foreigner?

No, foreign investors need to use a consultation agency to handle application procedures pursuant to Ordinance on <<Examination and Approval for the Foreign-Funded Enterprises>>.

Q3: How many organizations are responsible for the examination and approval of foreign investment projects in Shanghai? What are the detailed regulations?

There are altogether 24 organizations dealing with the examination and approval of foreign investment projects in Shanghai.

1. Shanghai Foreign Investment Commission examines and approves projects with an investment between USD 10 million & USD 30 million as well as projects which do not need the State's overall balance and with an investment over USD 30 million listed in Encouraged Industries.
2. Foreign Economic and Trade Commissions of district-level and of county-level are responsible for examination and approval of foreign investment projects with an investment under USD 10 million.
3. Local municipality can examine and approve projects located in municipal level industrial zones and with a total investment of less than USD 30 million listed in Encouraged Industries.
4. Pudong Administrative Committee and Free Trade Zone administrative Committee are responsible for examination and approval of projects with and investment under USD 30 million.

 

Q4: What documents do I need to prepare?

Please check the details in “Document required” link.

Q5: How many industrial zones are there in Shanghai?

The following are the state level development zones: Pudong new area (including Lujiazui Finance & Trade Zone, Jinqiao Export Processing Zone, zhangjiang High-Tech Park, Waigaoqiao Free Trade Zone, Sunqiao Modern Agriculture Development Zone), Hongqiao Economic and Technological Development zone, Caohejing High-tech Park, Minhang Economic and Technological Development Zone, Songjiang Export Processing Zone, Forward Hi-Tech Park.

Apart from above mentioned, the following are the municipal level development zones approved by Shanghai Municipal Government: Songjiang Industrial Zone, Jiading Industrial Zone, Qingpu Industrial Zone, Xinzhuang Industrial Zone, Shanghai all-around Industrial Development Zone of Fengxian, Shanghai Chemical Industry Zone, Kangqiao Industrial Zone, Pudong Xinhuo Development Zone, Baoshan Industrial Zone, Jinshanzui Industrial Zone, Chongming Industrial Zone.

Q6: What are the differences between WFOE, JV, and RO?

Generally speaking, approval to establish a WFOE is granted much more sparingly when compared to JV, a WFOE enjoys exclusive management control of its business activities, but the logistics of establishing a WFOE can be difficult and costly. RO is prohibited from direct business activities.

Q7: What is the lowest investment quota of overseas investors in a jointly invested or solely foreign-funded enterprise?

The lowest investment of an overseas investor in a Sino-foreign joint venture or a wholly foreign-invested enterprise shall be no less than USD 200,000 and that in a foreign funded enterprise shall be no less than USD 100,000, subjected to approval.

Q8: What procedures should the foreign invested enterprises follow to exchange the foreign currencies at the bank?

The Foreign Invested Enterprises should apply to their account-opening bank for handling the foreign exchange and provide the necessary documents such as Application Form for exchange of foreign currency, payment voucher of foreign currency or cheque according to the bank's requirements.

Q9: Is it necessary for a foreign invested enterprise to outright paid up all its registered capital?

The Foreign-Invested Enterprise shall pay its registered capital periodically according to regulation.

Q10: How can a foreign invested enterprise establish its branches?

The Foreign Invested Enterprises should apply to the original Registration Administration Bureau for Industry and Commerce for the establishment of branches in China in accordance to the relevant regulations. In addition, all registered capital has to be paid before it can establish any operative branches.

Q11: Can foreign invested enterprises enjoy the tax-refund policy for their exported goods?

Foreign invested enterprises, manufacturing and exporting goods within the company's business scope in accordance with Regulations on VAT Refund (Exemption) for Exported Goods and Notification on Taxation Issues of Foreign Invested Enterprises, can apply to competent tax authority monthly for VAT exemption for their exported products with the necessary documents. The input tax is used to credit the VAT payable on domestically sold products. The balance of the creditable input tax in excess of VAT payable shall be refunded.

Q12: What's the provision on the legal person of a foreign invested enterprise?

The Chairman of the Board is the legal representative of the enterprise.

Q13: As a foreign investor, can I remit abroad the profit from the foreign invested enterprise?

Yes, you can upon completion of the Corporate income tax payment to the local tax office.