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1 Services availableOur product range contains a wide range of Commercial Due Diligence Services, Business Set-Up In China, Business Planning Services, Business Set-Up and Business Advisory Services
Looking to do business with a Chinese company?
Looking to do business with a Indian company?
Want to know whether that foreign company is worthy of your business and your trust?
Solution : Due Diligence
Why Due Diligence is critical :
Our Commercial due diligence services allow corporate clients to make confident business decisions before dealing with country party :
We offer due diligence support in the following situations:
Due diligence in connection with investments:
When a foreign investor chooses to enter the China market, they will first need to decide whether to launch their business by establishing a legal entity with a capital investment in China or to start more cautiously by testing the market, building networks and/or hiring local representatives.
If a legal entity is the preferred route, the foreign investor will have to consider, in addition to the general commercial and strategic considerations: the business sector, the amount to be invested and whether a Chinese partner is desirable or even mandatory. Government rules for specific industries may affect the size and form of the investment. For instance, media, automotive and telecom industries are all industries that may require foreign invested enterprises to have local partners.
Representative Office (RO)A Representative Office (RO) can represent the interests of a foreign investor by acting as a liaison office for the parent company. ROs can conduct market research, develop partnerships and business channels and, since they do not have a minimum investment requirement, ROs are not considered to be a Foreign Invested Enterprise (FIE). ROs are the least complicated way for a foreign firm to have a legal presence in China and were, at one time, the first choice for foreign companies with little or no previous experience in the country. However all business transactions, including the issuance of invoices, must be managed by the parent company and ROs can only hire a maximum of four foreign employees. Any local employees must be hired through government-authorised employment agencies. ROs are usually taxed on a proportion of gross monthly expenses. Given the restrictions on transactions, employment and the taxation on expenses, WFOEs are generally now considered a better option for entrants seeking to develop their business in the China market.
Wholly Foreign Owned Enterprise (WFOE)A WFOE is a limited liability company (LLC) that is fully invested by one or more foreign investors. Along with the rights afforded to a RO, a WFOE may also legally conduct business transactions within China and hire local employees on its own accord. However, foreign investors do have to make an investment into the company and, depending upon the business activity, there may be a minimum capital requirement. WFOEs have begun to outpace joint ventures as the most popular vehicle for a China presence.
Joint Ventures (JVs)There are two types of joint venture structure in the China market:
Mergers and Acquisitions (M&A)M&A has become an increasingly popular route to invest in China in recent years. There are many options for M&A in China, including equity and asset acquisitions, as well as mergers. As a form of foreign direct investment, the general rules on establishment of FIEs also apply to any M&A.
Specifications
Comparison | RO | WFOE |
---|---|---|
Registration Procedures | Incorporation documents, bank statements of credit | Business plan, name approval, corporate documentation such as Articles of Association |
Time Required | 1-2 months | 3-5 months |
Capitalization | No registered capital required | Minimum registered capital depending on industry and locality; minimum investment RMB 100,000 |
Business scope | Cannot engage in profit making activities (except law firms) | Can engage in direct business operations as listed in Articles of Association |
Liability | NOT legal person; liability assumed in parent company | Legal person; limited liability company; parent company liability limited to WFOE registered capital |
Regulatory Requirement | No MOFCOM approval for most industries; registration with AIC | MOFCOM approval and registration with AIC |
Tax Method | Cost + or Actual method | Actual taxation method |
Adaptability to demand | Cannot establish subsidiaries or branches | Can establish subsidiaries or branches |
Staff | Cannot employ directly; must use registered employment agencies | Can employ directly |
A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals. A business plan is also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road. Effective business planning can be the key to your success. A business plan can help you secure finance, prioritise your efforts and evaluate opportunities.
Market EntryA market entry study is the first recommended step when looking to start business in China or Hong Kong. At this stage we can help our clients to provide following sector specific services:
Business StrategyIn any business venture it is important that you figure out what you want. Having a clear strategy which defines what you expect of your adventure in China/Hong Kong makes every step you take easier. Besides the standard reasons to write a business plan or perform a thorough market feasibility study it is especially important in negotiations with Counter party. Knowing what you want is the difference between success and failure when looking to start business in foreign country. Our team at has the extensive knowledge and experience needed to do so, and therefore we are able to assist our clients to successfully plan and expand their business operation in China or Hong Kong.
At this stage our team will guide you on following important things :
Company Structure
Physical Set-upOur team will help you to select office premises and we will assist you in lease rent agreements or sale deed for outright purchase of office premises.
Company RegistrationCTS offer a full range of consulting and services on the establishment, changing or closing of Wholly-Foreign Owned Enterprises (WFOE or WOFE), Pvt. Ltd. or Public Ltd or Joint Ventures (JV) and Representative Offices (RO).
Business Laws and Regulations for Hong KongHong Kong Companies Ordinance provided by the Department of Justice, Hong Kong SAR Government. Bilingual Laws Information System provided by the Hong Kong Department of Justice, Hong Kong SAR Government
Business structuresBusiness in Hong Kong can be conducted through limited companies, limited partnerships or by individuals acting as sole traders. To incorporate a company or to set up a business can be done through the appropriate Hong Kong government departments.
Types of businesses in Hong Kong:
TaxationHong Kong has a very simple system of taxation with low rates making it easy to conduct business. There is no capital gains tax, no tax on dividends, estate duty or inheritance tax, no payroll tax, no VAT tax and no tax on profits derived from outside of Hong Kong. Some indirect taxes such as vehicle registration fees and duties on tobacco and liquour are in place.
Trade regulationsHong Kong has an open door policy on trade and does not charge tariffs on exporting or importing goods. Import and export licencing is kept to a minimum.
Labour lawsHong Kong’s labour legislation is in line with those of international laws and it has implemented many conventions from the ILO (International Labor Organization). It has legislated policies to facilitate the entry of highly skilled financial professionals. A statutory minimum wage was introduced in May 2011.
Foreign investmentForeign investment is strongly encouraged. All industry sectors with some exceptions are open to foreign investment and it is not uncommon to have 100% foreign investment in an industry. There is no discrimination between foreign and domestic investors.
Corporate governance
Hong Kong has in place high standards to ensue effective corporate governance. A Draft Code on Corporate Governance Practices and Corporate Governance Report issued by the government in 2004 has become the standard for corporate governance in Hong Kong.
For More details Read our Guide on Doing Business in Hong Kong
Download Presentation on Doing Business in Hong Kong