Setting Up A Rep Office And Factory In China

Setting up a RepresentativeOffice / Factory in China

Calipe ChongManaging Director

www.vipoasia.com

Agenda

VIPO Asia Introduction Economics status in China Opportunities in China Business Structure General Info Q & A

VIPO Asia Introduction

A Singaporean-led company operating from Suzhou providing supply chain and management services with our proven track records and expertise in setting up representative offices, manufacturing facilities, joint ventures and sourcing operations.

I have 30 years working experience with US companies in semiconductor, consumer electronics, EMS, outdoor power equipment and automotive industries. Actual work experience in engineering, operation, production & materials planning, supplier quality, administration, supply chain, purchasing, sales & distribution and logistics management.

Our Service

We provide management services on :-

Business analysis, reports, site selection, market study, etc

Coordinating with 3rd parties to conduct due diligence on Chinese partners

Business & license registration with various government bodies, bank application , trademark and patent registration, etc

Drafting of contracts, contractors selection and management

Project management to furnish office and building construction

Setting up Sourcing, Operation, Sales, IT, HR and Finance

Hiring of key personnel, establish labor contract & employee handbook

Interim management of the organization for 1~2 years before handling over to client

Our Strengths

We can do a better job because:-

We are Asian and we have astute knowledge on the culture, language, business practices and custom

30 working years with American companies and we have good understanding of their expectations and goals

Start up a manufacturing facility in Suzhou EPZ

Actual accomplishment in setting up and managed representative offices in Shanghai and Shenzhen

Proven management skills to lead strong teams and inspiring staffs to excel

Vision

To be a renowned supply chain and management services provider which allow our clients to profit from the economic and competitive advantages in Asia and act as a bridge between East and West.

Mission

We want a long term partner relationship with our clients and help to lower their operating cost, enhance their operation efficiency and expansion of their market or manufacturing operation through: Set up new factories, representative offices and joint venturesSourcing appropriate, quality and cost effective products and services in Asia Incorporating cost effective and efficient logistics management Meeting delivery schedules and requirements Providing all relevant integrated supply chain solutions and operations Marketing or establishing distribution for their products in Asia

In addition, we also want to be an establishment which we are proud of and envied by clients, peers and competitors for our integrity, ethics, professionalism, efficiency, innovative ideas and high esteem.

China Economy (2008)

Third largest in the world after US and Japan

Nominal GDP is US$4.6 trillion with an average growth rate of 10% since 1978

Export and import is US$1,216 billion and US$954 billion respectively (2007)

Expanding domestic consumption is one strategic priority to stabilize growth and counter current global economic crisis.

Fast developing automotive industry and tops global car sales

Source - http://en.wikipedia.org/wiki/Economy_of_the_People's_Republic_of_China

Opportunities in China

Humongous domestic market for the super rich and immense population

A huge talented and hard-working pool of workers Favorable government policies to attract foreign

investment fund Incentives and preferential treatments from local

governments Huge and well established supply base Superb infrastructure supporting operation and

transportation World class logistics facilities, network and

management Test centers to meet worldwide test standards and

requirements FTA agreement with ASEAN – an added huge market

potential Favorable incentives for energy saving and green

projects

“One cannot complete his global business strategy without considering China factors”

Opportunities in China

Energy and Power Automotives Manufacturing Environmental

Infrastructure Healthcare Machinery Food and Beverage Chemicals Luxury Goods Merchandized Goods Tooling

Representative Office

Legal Status : No legal personality from corporate

Purpose : Sourcing, Logistics, Customer service, Market

Research, Liaison Office with Corporate

Pros : Inexpensive to set up No capital requirement Exploration of business environment, market and

liaison activities

Cons : Complex registration for the size of organization Cannot invoice locally in RMB Must hire staff from local agency

Joint Venture (JV)

Legal Status : Legal personality Limited liability

Purpose : When restrictions require a local partner When sales & distribution channels are best done

through local partners

Pros : Use of existing facilities and workforce Use of existing sales & distribution channels

Cons : Management compatibility, assimilation and

tolerance Inheriting staff liabilities Risk on losing technology transfer and IPR

Wholly Foreign Owned Enterprise

Legal Status : Legal personality Limited liability

Purpose : Manufacturing operation Sales & services

Pros : Full ownership and control Security on technologies, IPR and corporate culture Convert RMB to foreign currency for repatriation

Cons : Need to fund total investment capital requirement Need to learn and adapt local business practices Availability of competent and receptive expatriates

Total Investment

(“TI”)

Minimum Registered Capital

(“RC”)

Less than 3m 70% of the TI

Between 3m and

10m

Higher of 2.1m or 50% of the TI

Between 10m and

30m

Higher of 5m or 40% of the TI

More than 30m Higher of 12m or one-third of TI

Debt-equity Ratio (thin-

capital rule)

The difference between total

investment and registered capital

could be financed by loans, which

could be borrowed from banks, 3rd

parties or shareholders.

Technically speaking, due to the

above debt/equity ratio requirement,

the difference between the approved

total investment and registered

capital provides a cap on the sum of

accumulative loans available for an

established company.

In practice, the debt-equity ratio is

more relevant for foreign

debt/borrowing foreign guaranteed

loan purpose and FIE may still

borrow domestic loan in RMB in

excess to the above cap.

The total investment amount represents the aggregate amount of funds or assets intended to be invested in the WFOE over its operating life.

Generally, all contributed capital constitutes as registered capital. The difference between the total investment amount and the registered capital constitutes debt, which can be financed by the investors or third party lenders.

Please note that according to the relevant PRC laws, the registered capital may not be reduced during the life of the WFOE unless certain conditions are met and such reduction is approved by the approval authority.

Application for the issuance of Approval Certificate


Subsequent registrations(tax, customs, forex,etc.)

Day 1

Day 50 - 60

Day 90

Business Registration with In-charge government authorities

(Business License)


(Business License)

Documents Preparation(e.g. AOA, FSR, application letters,

etc..)


etc..)

Day 20 - 30

Preparation

Approval

Registrations

Name Registration with competent government authorities


Basic Approval Procedure on the Company Formation

Note:

• This is a standard approval procedure required for the company formation in China.

• The approval authority could vary depending on different industries. Nevertheless, the approval from State/local/zone level MOFCOM is required.

• The process might be simplified and speeded up with local government’s proactive support.



Subsequent registrations(tax, customs, forex,etc.)

Day 1

Day 50 - 60

Day 90


(Business License)


(Business License)


etc..)


etc..)

Day 20 - 30

Approval

Registrations



Note:

• This is a standard approval procedure required for the company formation in China.

• The approval authority could vary depending on different industries. Nevertheless, the approval from State/local/zone level MOFCOM is required.

• The process might be simplified and speeded up with local government’s proactive support.

Cash Repatriation Introduction

Royalties (Trade mark, Licensing)

Non-technical Service Fees(Marketing, administrative services,

etc.)

Technical Service Fees

Overseas ParentForeign Investment Enterprise in China

Dividends

Service Cost Sharing

Technology Cost Sharing

Buy and Sell

Interest, Rentals

Reimbursements

Creative Industry ParkCreative Industry Park

Dushu Lake Higher Education DistrictDushu Lake Higher Education District

Planned area ：

10 sq km

15 renowned universities

Over 12000 students

SIP Industrial Technical School SIP Industrial Technical School

•Nearly 1700 students

• Implemented courses ： Digital control technology、

Application electronics 、Internet, ect

Suzhou Singapore International SchoolSuzhou Singapore International School

Residential DevelopmentResidential Development

Let us help you to achieve your goals to Let us help you to achieve your goals to set a foothold in China !set a foothold in China !

Thank You

Setting Up A Rep Office And Factory In China

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