Shenzhen Corporate Formation
Shenzhen Corporate Formation is another called of Shenzhen Business Setup, or Shenzhen Company Foramation or Shenzhen Corporate registration.Investing in Shenzhen, the foreigners need to choose the suitable way according to the situation. Since the foreigners are not familiar with the procedures of Shenzhen corporate formation, it’s necessary to ask the professionals for help. Tannet Group Limited, with a professional team of more than 500, provides the oversea investors with the services of Shenzhen corporate formation and management, financial and tax management.
The forms of Shenzhen Corporate Formation are as the followings: Wholly Foreign Owned Enterprise, Representative Office, Equity joint venture, Co-operative joint venture and Foreign Investment Enterprise. To establish a company in Shenzhen, the foreigner can choose any form of the above-mentioned; however, the requirements and advantages are different. Before investing in Shenzhen, the investors need to know the requirements, procedures of Shenzhen Corporate Formation.
Wholly Foreign Owned Enterprise (WFOE)
The Wholly Foreign Owned Enterprise, abbreviated WFOE, is a common investment vehicle for mainland Shenzhen-based business. The unique feature of a WFOE is that involvement of a mainland Chinese investor is not required, unlike most other investment vehicles. WFOEs are limited-liability corporations organized by foreign nationals and capitalized with foreign funds. This can give greater control over the business venture in mainland Shenzhen and avoid a multitude of problematic issues which can potentially result from dealing with a domestic joint venture partner.
Representative Office (RO)
A Chinese representative office (RO) is an institute setup in Shenzhen, representing its parent corporatefor liaison with Chinese counterparts. A RO is not considered to be a separate legal entity. It can not directly engage in business operation. However, through which its parent corporate can enter into contracts with its supplier/customers in Shenzhen in its own name, but not under the name of RO. A representative office is popular for those who are willing to enter Shenzhen at the test period of business and investment.
Equity joint venture (EJV)
The corporate form of an EJV is the limited liability company, which possesses the status of a Chinese legal person. It involves joint investment and operation and the sharing of profits and losses, as well as risks in proportion to the partners’ respective shares in the registered capital.
Co-operative joint venture (CJV)
In most respects, CJVs are structurally similar to EJVs. Unlike EJVs, however, CJVs can be established either as a limited liability company as a non-legal person, in which the partners are subject to unlimited liability and thus entirely liable for any losses. The rights and obligations of the JV partners concerning issues such as distribution, investment, operation and sharing of profits/losses and risks are determined by the individual joint venture contract.
Foreign Investment Enterprise (FIE)
Setting up an FIE is a common method of creating an operation in Asian countries, especially in Shenzhen. In Shenzhen, any one of a number of legal entities can be considered FIEs including equity joint ventures (EJV), cooperative joint ventures (CJV), wholly-owned foreign enterprises (WFOE) and foreign-invested companies limited by shares (FCLS).
Among the two forms of Sino-foreign joint ventures, the EJV is longer-established but provides less flexibility. The allocation of profits is the most significant difference between the two. In EJVs, the ratio of capital contributions made by the partners determines how profits are allocated. By contrast, CJVs allow profits to be allocated according to the terms of the partners’ individual agreement. JVs are still attractive for foreign investors who need a local partner with established connections and a distribution network, or who are looking for a partner with existing facilities and workers.
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