Establishing a Company in China Free Trade Zones
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At a bi-monthly meeting on December 28, the Standing Committee of the National People’s Congress mapped out the specific locations of the three new Free Trade Zones (FTZ) announced earlier. The meeting also announced the expansion of the Shanghai FTZ, as well as the simplification of a number of investment procedures in these zones.The expansion will increases the area of the Shanghai zone to 120.27 square kilometers, making it larger than any of the new FTZs. This reform will allow Shanghai to give full play to the advantages of the Pudong New Area and to test foreign investment reform on a larger scale, officials commented.
Additionally, the State Council plans to remove 12 administrative approvals for foreign companies, Sino-foreign joint ventures (JV) and Taiwanese investors in the country’s FTZs. Foreign companies seeking to set up a company in one of the zones will only need to report to the relevant authorities for record-filing, rather than obtain pre-approval from the AIC, as previous.Administrative approval will also be repealed for foreign companies wishing to close up or merge, or change their operating period. Joint ventures in the zones will be exempt from administrative approval for establishment, extension of their cooperating period and major changes of contracts or Articles of Association. These preferential policies shall take effect on March 1, 2015 with a three-year trial period.
It was announced that the Guangdong FTZ will include the Nansha New Area in Guangzhou, Shenzhen Qianhai and Zhuhai Hengqin New Area, covering a total of 116.2 square kilometers. The Tianjin FTZ, with a total area of 119.9 square kilometers, will be comprised of Tianjin Port, Tianjin Airport and the Binhai New Area industrial park. Lastly, the 118.04-square-meter Fujian FTZ will include industrial areas in the provincial capital of Fuzhou, the whole of Xiamen and Pingtan, a new industrial park targeting investment from Taiwan.
As southern China’s economic center, Guangdong has topped the GDP ranking of all provinces for nearly two decades. The province is proximate to Hong Kong and Macau and contains three of China’s five original Special Economic Zones (Shenzhen, Zhuhai and Shantou). Guangdong has been working towards further integration with Hong Kong and is home to 22 state-level economic development zones, which have attracted large amounts of foreign investment.
It is one of the leading industrial provinces of China through nine main industries, namely electronics, electrical appliances and machinery, petrochemicals, garments and textiles, food and beverage, construction material, paper making, pharmaceuticals, and automotive. Guangdong holds the largest share of China’s electronics industry, which comprises over 41 percent of the province’s total industrial output.
Given its geographic advantage, Fujian is one of the wealthiest regions in the country and was chosen as the first province to engage in economic exchange with Taiwan. Today, the economies of Fujian and Taiwan are closely related and complimentary – with current major industries of both regions geared towards electronics, petrochemicals and mechanics.
The provincial government is currently focusing on the construction of a modern transport system by developing expressways, railways and ports. It is expected that by the end of 2015, Fujian’s coastal ports will be capable of handling 500 million tons of cargo and the length of its roads and expressways will exceed 5,000 kilometers.
Tianjin is also close to major oil and gas deposits, and as such, petrochemicals is a major industry. In 2010, Sinopec opened a large petrochemical facility in the city. The refinery, a joint venture between Sinopec and Saudi Basic Industries, mainly processes crude oil from Saudi Arabia at the moment. Other major industries include automotive, pharmaceuticals and metallurgy.
With the biggest port in Northern China, shipping is another major industry. Tianjin is the fourth busiest port in the world in terms of tonnage, after Ningbo-Zhoushan, Shanghai and Singapore. Measured by TEUs (twenty-foot equivalent units, roughly the volume of a shipping container), it ranks tenth.Other major sectors include the manufacturing of mobile phones and aerospace assembly and production.The Tianjin FTZ is expected to especially stimulate high-end manufacturing, financial leasing and further integration of the Bohai Bay area.
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