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Hongda China Business Services FAQs

Quick answers to common questions you may have about doing business In China and Hong Kong

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To answer some of your most frequently asked questions about our China business services, we've compiled a list to help assist you quickly answer any queries you may have.

Shenzhen & Guangdong Company Setup (inc. WFOE in China)

How do I set up a company in Shenzhen or the PRD?

Prepare the shareholder certificate, letter of good standing from the bank. Find an office in China. Make the application (of course better find a professional agent in China to help you).

Do I need to have a foreign company to start a company in China?
No, you could also use your personal name to start the company in China. 
What investment vehicle (company) can I use to start a Chinese company?
Any company overseas which has the certificate of incorporation. 
Which kinds of Chinese companies may a foreigner start?

Three: WFOE, Representative Office, Joint Venture. 

Which kind of Chinese company is best for a trading company (import or export) / online store / manufacturer / service company?

A limited company, such as a WFOE. 

What is a WFOE?

Wholly foreign owned enterprise.

What is a representative office?
A branch office in China. It can conduct business support tasks, but cannot receive payments from clients. 
What is a joint venture company?
Foreign investor partner + Chinese Company investor partner.
What is the difference between a WFOE & WOFE?

They are the same, it is just that some people refer to this company in either way. 

Which documentation do I need for a WFOE / rep office / JV?
Oversea investor's certificate, bank reference letter and office in China are the key documents for each company type. 
How much registered capital do I need for a WFOE / rep office / JV?
Min 100,000RMB for WFOE and JV, but there is no investment requirement for a Rep.Office. 
How much does it cost to set up a WFOE / rep office / JV with Hongda?
15,000-18,000RMB for WFOE/JV; 12,000RMB for Rep Office.
What are the benefits of a WFOE / rep office / JV?
Legally running the business in China. Hire Chinese employees, Apply for work visas for foreign staff.
What are the drawbacks of a WFOE / rep office / JV?

Rep.Office:High tax, could not hire Chinese employees directly.

WFOE/JV: Slow registration time.

The benefit of all is that if you aim to run a business in China, any will allow you to do so. 
Do I need both a China company and an HK company?

Yes, both will be very useful. Different companies help you solve different problems. 

Do I need to personally go to China to set up the company?

No, you dont. Hongda Business Services can help you to do this while you are abroad. 

Do I need an actual office space to register a WFOE / rep office / JV?
Luckily now, you dont. Hongda Business Services can provide the office address for registration. 
Is a virtual office permitted for a WFOE / rep office / JV?
Yes. 

Hong Kong Company Registry

Can I operate in China with my HK company?
No, you cant. Please set up a Chinese company to run the business in China. 
How do I setup a HK company?
Offer the company name and shareholder information. Hongda Business Services can help you perform the application efficiently.
Do I need to have a foreign company to start a company in HK?

No, you dont. An individual is permitted to start a company in HK. 

What investment vehicle (company) can I use to start an HK company?
Any limited company can do so. 
Which documentation do I need for an HK company?
Company name information. Shareholder information. 
How much registered capital do I need for an HK company?

10,000HKD as standard. 

How much does it cost to setup an HK company with Hongda?
6500RMB
What are the benefits of an HK company?
Brand promotion, modern financial system in HK, and business bank account which is not inspected by government. 
What are the drawbacks of an HK company?

There are no drawbacks. Only benefits, given that it is cheap and fast to set up.

Do I need both an HK company and a China company?

Yes, having both gives your business a lot more options than just one or the other.

Can I invoice Chinese clients with an HK company?
Yes, you can. If you have business with them. 
How do I setup a corporate bank account in HK?

After HK company registration you can go to the bank directly. 

Do I need to personally go to HK to set up the company?

No, you dont. Hongda Business Services can do this for you. 

Do I need an actual office space to register an HK company?

No, you dont. Hongda Business Services can provide one. 

Is a virtual office permitted for an HK company?
Yes.

Taxes In China

How much tax do companies / WFOEs / rep offices / JVs pay in China?
They each pay tax, but it is calculated by a formula and can vary.
Are there different tax thresholds for companies?
Yes. There are. 
How much employer's tax do I need to pay for local / foreign staff?

The employer, as a company, needs to pay the profit tax when making a profit. 

How much income tax do local / foreign staff pay?

Individual income tax is taxed according to 7 different levels. There is a formula to calculate this.

Do different areas have differing tax regulations?

Different areas of China do have different discount policies. 

Do foreign staff need to pay social insurance?
Yes, they do. After they get the work visa, they have to. 
How much social insurance do foreigners need to pay?
The same as Chinese staff. There is a formula to calculate this.
Can I reclaim my social insurance payments if I leave China?
Yes, you can if you’re a foreigner. 
Are there any tax exemptions for foreign companies / staff in China?
No, not currently. 
Are there any perks for taxpayers in China?
Not specifically. Paying tax is an obligation.
Can I use my HK / foreign investment vehicle to reduce my China tax bill?

No, you cant. These are two different tax areas. 

How long do staff need to be working in China / HK each year to be eligible to pay tax?

If an individual works in China or Hk at any time and receives a salary he must declare this to pay IIT (individual income tax).

Can a WFOE / rep office / JV issue invoices (fa piao)?

WFOE/JV can.

Rep. Office cannot. 

China Accounting

How often do accounts need to be filed in China?

Monthly. 

Can a foreign accountant file Chinese accounts?

Yes, but the system here is all in Chinese and Chinese accounting law is different from that of the rest of the world. 

Do I need to hire a local accountant as a member of staff?

If your company has much accounting work, you perhaps need to. But we advise that you will usually benefit from the accounting service from Hongda Business Services.

How do I file accounts in China?
Hongda Business Services can help you do this. 

Banking In China

How do I open a Chinese / HK corporate account?

With company and investor information and going to the bank directly. Bank staff usually speak some English in China, but perhaps not very well. 

Do I need to go to the bank to open an account?
Yes, usually you need to, although Hongda can help in some cases.
Which documentation is needed to open a corporate account in China / HK?

Company registration documents. and the directors' passport. 

Do companies need both HK and Chinese accounts?

No. A Chinese company cannot open the bank account in HK.

HK and Mainland China are two different areas which follow the different law. 

Can I send money abroad from HK / China?
Yes, you can, if it is legal business money. 
How do I receive money into HK / China from abroad?

HK: Just receive as normal.

China: Receive and inform the bank what it is for. 

Can my foreign employees send money abroad?

HK: As easy as in the West.

China: It is possible, but hard as the bank will require many documents from them. 
Can my foreign staff be paid both in China and abroad?

Abroad: Yes.

China: Yes. 

Human Resources in China

How can I hire local / foreign staff?

Find them through website, agent, friend introduce and others. Apply for their China work visa which Hongda Business Services can do for you. 

How many work visas can a WFOE / rep office / JV apply for?

Rep.Office: 4

WFOE/JV: No limit

Is an employment contract needed?

Yes, in Chinese and English.

Does an employment contract need to be in Chinese?

Yes, we advise this. 

Can a foreign employee work in China without a work visa?

No, he cant. 

How long is the probationary period in China?

Depends on the labor contract valid time. The Maximum period is 6 months. 

What is the right way to dismiss staff in China?

This is a complex task that needs a lot of explanation - please contact Hongda Business Services to discuss, as we can offer this HR advice. 

Can I dismiss staff without compensation?

Possible, but it depends on the reason and evidence to dismiss him. 

Do I need to hire HR staff?
If your company is becoming large they will be needed.
Does all company documentation require the official stamp?
Yes. 
Which documentation do foreign staff need to work for a Chinese company?
Work permit, work visa. 
Which qualifications or expertise is required to employ foreigners?
His Highest education certificate.

China Visa Application (+ China Work Visa For Foreigners)

What is the process to get a Z (work) visa?

It takes two month and 6 visits to government departments to get the Z visa (temporary residence permit). Hongda Business Services can assist with this complex procedure.

Which documentation is needed to apply for a Z (work) visa?

Education certificate, medical report, Company license. 

What is the process to get an M (business) visa?

Apply through Hongda Business Services or China embassy directly. 

Which documentation is needed to apply for a M (business) visa?

Invitation letter, company documents and passport + visa application form. 

What is a temporary residence permit?
It is a permit to prove where you live in China and to allow you to remain here long term.
What is a Z / F / M visa?

Z: work visa

F: business visa

M: Before is F, now it is M.
What type of visa do I need if I am:

1. Going to a trade show
2. Intending to set up a company
3. Collaborating with a client
4. Consulting on behalf of a foreign company
5. Visiting a client?

1. Business visa. 2. Business visa. 3. Business visa or work visa. 4. Business visa or work visa. 5. business visa. 
Can I work in China if I hold an M visa?
No, not for a local company. You may conduct temporary business activities for your foreign employer and then leave. 
If my foreign employee is the spouse of a local person, do they need a work visa?
Yes, he would still need one. 
If a foreign employee from the overseas company visits China, and then decides to stay and work for the Chinese company, what would everyone need to do to make this happen?
To apply for the work visa when he decided to stay. Hongda Business Services can assist. 

China Trademark Registration

How do I register a trademark in China?

Design the logo, and select which product or service your trademark is used for from the permitted categories. It is a long and complex process, and so assistance from a professional agency like Hongda Business Services will save you a lot of time and work.

If my trademark is registered abroad, do I need to register it in China?

Yes, you need to. Please note the "Ipad" case in China. 

Which documentation is required to register a trademark?

Logo, owner documents, application forms. 

Commonly, how would an IP lawsuit be settled in China and how long would this take?

1. Charge in court.

2. Economy lawsuit takes 1 -2 years.

Hongda Business Services are able to consult on IP lawsuits and advise the best course of action.