When establishing a China presence, overseas companies have several options -- wholly foreign-owned enterprise, representative office, joint venture. Is there a preferred option for a sourcing office?
There are various structures available to companies looking to source effectively in China. The individual options vary in terms of investment, risk, commitment, control and time frames. For the export out of China White Packers Matthews Jersey customers White Packers Matthews Jersey generally have two options:
1. Exporting from China without any local representation or
2. By establishing a sourcing presence in China
It is important for companies to understand what strategies are available and how these structures could fit into their existing business models.
Outsource all export activities in China
Sourcing with no representation
Many foreign companies may feel that in today's global economy, it is vital for their business to be present in the rapidly growing Chinese market. Not every company, however, has the resources to immediately set up their own entity or send expatriate staff to China. At the same time they may not feel complete loyalty from the local suppliers, trading agents and logistics providers.
A foreign company has the option of establishing a network of logistics providers all around China to assist in the export of goods as suppliers are located in various regions of China. Sourcing in China without any local warehousing facility is naturally the first step for many, but if any company wishes to expand and use the full potential of the China market, a local presence may be unavoidable as consolidated shipments may be required to customers all around the world.
Looking for an appropriate agent
The greatest challenge for foreign buyers is to find dedicated, reliable, professional and credit-worthy agents. A long-term, focused and consistent strategy is needed to access and profit in the market. An agent could be a manufacturer who is in a similar field as the foreign company or an import/export company that is well established in the field and has connections and an extensive network with suppliers. Agents both buy and sell the products, or they act as commission agents receiving a sales commission.
A first step towards a buying representation in China would be to identify an agent who will search for reliable suppliers on the Chinese market; however this is not always a recommended method as the agents can be in conflict due to sister companies which produce similar products.
Outsource your "Buying Office"
Service providers have developed services where the foreign company can utilize outsourcing services in order to establish their own buying and consolidation network without having to set up their own entity with fixed cost, or loose control over the order transactions to a local agent or logistics provider. As a second step, companies with their own
This effective outsourcing solution provides the foreign company with a customized outsourcing service for a smooth and trouble-free market entry. The foreign company may continue to utilize the service providers for as long as they wish. Usually, after a few years, clients have gained significant experience and access to the market, and are ready to set up their own entity. At this point it will also be possible for the foreign company to then take over the employees, which so far have been working for them in China within the service provider's structure.
Establishing a Hong Kong Trading Company
Establishing a Hong Kong Company for purchasing activities with China and the rest of the world has many advantages. When buying from the Chinese and/or Asian market, the Company can enjoy significant tax and operational benefits - with or without a China mainland entity. The Foreign Company can use a Hong Kong Company as a re-invoicing center for purchases from China and other Asian countries and accumulate profits at favorable tax rates. The regular tax on profits is 16.5%, but if the profits of a Hong Kong Company are generated through offshore business, they are tax free.
Every year once the company has been audited, the tax return to the Hong Kong Inland Revenue Department has to be filed. If the company has only conducted offshore business, a 0% tax rate can be applied for. In order to be able to justify "offshore business" the company should:
- have no employees in Hong Kong
- do not issue or receive any invoices to and from other Hong Kong companies
- shipments should not go through Hong Kong
- business decisions should be done outside Hong Kong
There are two common possibilities to structure the Hong Kong Company. It can either be a subsidiary of the overseas company or a person can be the shareholder of the Hong Kong Company.
Once the Hong Kong Company has made profit, and the annual audit and tax return have been completed, the dividends can be remitted. Dividends in Hong Kong are tax free. If the company in Hong Kong is held by an individual, the profit can be repatriated to the home country; however it will most likely be taxed on the profits in the home country.
Establishing a Hong Kong Trading Company with a Representative Office in China
Nevertheless, if the Company decides to hire mainland Chinese staff in China, in addition to having a trading company in Hong Kong, a legal entity would need to be established. A Representative Office (RO) is the easiest and most economic way of setting up a legal presence in China. It is an office of a foreign enterprise set up for the purpose of liaising with Chinese businesses and customers on behalf of its parent company. A RO is not considered to be a separate legal entity and it can not carry out direct revenue earning business activities, i.e. it cannot enter into purchase/sales contracts and cannot receive payment for products or services, issue invoices or repatriate monies overseas. A RO is restricted to conduct only "indirect operational activities", such as:
没有评论:
发表评论