Key Corporate Features
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China is situated in the East Asia covering an area of
approximately 9,600,000 square kilometres. It borders in the
north by Russia, Mongolia; in the north-west by Kazakhstan;
in the west by Tajikistan; in the south by Afghanistan,
Pakistan, India, Vietnam, Nepal etc.; in the north-east by
With a population of 1.3 billion, China is the most
populous nation in the world. The major cities are the
capital Beijing, which is the political and cultural centre,
and Shanghai, which is the largest industrial, commercial
and financial centre. Other important cities are Guangzhou
and Shenzhen in the South, Fuzhou on the coast opposite
Taiwan and Tianjin near Beijing in the North.
In October 1949, the Communist Party leader Mao Zedong
proclaimed the People's Republic of China on the mainland.
The then ruling Guomindang fled to Taiwan and established a
government-in-exile. At present China is governed by the
Central Government headed by President Hu Jintao, who is
also the General Secretary of the Communist Party.
Traditionally China is very much an agricultural society and inward looking.
However since the United Nations recognised China in 1971, China has gradually
come more and more out of its isolationist shell that resulted in Deng Xiaoping
leading the way to economic reform by initiating the Open Door Policy to develop
its economy. The Central Committee has recently strengthened the Open Door
Policy in order to keep economic development on track. At present the Eleventh
Five-Year plan (2006-2010) focuses on the harmony of the society. The emphasis
is very much on the abridging gap between the rich and the poor.
In July 1997, Hong Kong's status as a British colony came to an end when
sovereignty over the territory successfully returned back to China. In line with
Deng Xiaoping's "One Country, Two Systems", Hong Kong is allowed to retain its
capitalist system and lifestyle for at least 50 years after the hand over.
The road and rail networks are best developed around the
major cities, such as Shanghai, Beijing, Guangzhou, and
Shenzhen. Modernization is arguably most striking in
Shanghai which is currently developing a second
international civil airport and has updated major parts of
its infrastructure by completing several large bridges and
elevated highways, as well as a great number of residential
housing projects. Across the river from Shanghai's famous
Bund area, a new financial and services centre, Pudong New
Area, is developing rapidly.
The official language is Mandarin, which is widely spoken
across the country. However, especially in Southern China
many dialects are spoken, some of which are entirely
different, most notably Cantonese which is the common
dialect in Hong Kong.
Renminbi (RMB). US$1.00 equals approximately RMB7.00.
All foreign exchange is controlled under the Provisional
Regulations for Exchange Control of the PRC of 1981, as
modified in 1985.
Based on The Law of the People's Republic of China on
Joint Ventures Using Chinese and Foreign Investment and The
Law of the People's Republic of China on Enterprises
Operated Exclusively with Foreign Capital.
China has recognised three forms of business
organisations available to foreign investors in China: Joint
Venture, Wholly Foreign-Owned Enterprise and Representative
JV and/or WFOE:
Submission of relevant documents such as project
proposal, report on feasibility study, joint venture
contract if applicable and memorandum and articles of
association. Once all documents submitted are in order, the
relevant government authorities (MOFTEC) will issue a
Certificate of Approval and Business Licence.
Submission of relevant application documents to the authorities to obtain a
Certificate of Approval and Registration Certificate, as well as resident
representative's certificate. Thereafter other registrations, such as company
code, tax and customs need to be made with the respective authorities.
Cannot conduct import and export activities, unless has the import and export
A Chinese company has generally all the powers of a
Yes, must be maintained in P R China.
Approximately three months.
Any name that is identical or similar to an existing
Yes, by formal request to the MOFTEC.
official name shall be in Mandarin.
Bank, Building Society, Savings, Loans, Insurance, Assurance, Fund
Management, Investment Fund, Trust, Chamber of Commerce, University, Municipal
or their foreign language equivalents.
In English if applicable name "Limited" or "Ltd", "Company" and
Yes, prior to incorporation. If beneficial ownership changes, the
registration authorities must be informed soon.
Depending on projects, type of incorporation and approval
by the authorities. Some favourable policies may apply.
The taxes levied on the foreign investment enterprises
depend on case by case and approval, as the regulations and
policy on taxation in general is not strictly fixed.
Therefore, before setting up a subsidiary in China, a
foreign company must examine its businesses carefully so as
to either use the favourable policy, or avoid limitations
and potential problems.
China has double taxation treaties with a large number of
All companies must prepare financial statement and keep
the financial records to reflect the financial position of
The minimum number of directors is one. If the company is
going to form a Board of Directors, the minimum number of
directors is three.
There is no statutory requirement for a company
The minimum number of shareholders for a JV is two whilst
for a WFOE the minimum is one.
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