China or the People's Republic of China is one of the oldest countries in the world, with more than five thousand years of ancient history. Over this long period national territory was invaded many times, it has undergone many changes but still retained the Chinese ethnic group. Generally, all the Chinese invaders sooner or later assimilated into the Chinese culture and its territory became part of the China. All the time up to the 20th century power in China constantly was transferred from one dynasty to the other, and only in 1911 during the revolution the emperor was overthrown, and since then the country has gained republican status.
The Golden Age era of ancient China is considered the middle of the first millennium, for today's China it is just in front. Since 1978, after the transition to the socialist market economy, China's GDP and industrial production began to grow rapidly. China ranks second in the world after the GDP figures in absolute terms and the first after the PPP (purchasing power parity). According to economists' estimates China soon will overtake the current leader- USA. This growth was due to a large number of SEZs, industrial policy, a large flow of investment and opening of foreign markets for export.
The most common business entities
China's legal system provides the opportunity to build various types of companies. These include:
Joint Venture (JV), showing a variety of options for economic partnership between the Chinese and foreign investors
Wholly Foreign Owned Enterprise (WFOE)
Representative Office (RO)
All three schemes have their advantages and disadvantages, but most foreigners prefer WFOE and RO-type business entities.
Corporate Law in general has very complex structure, which has developed in the context of historical value, socialist law partially interspersed with Roman-Germanic law.
Registered capital is defined in the Chinese yen, for limited liability companies it is set in the amount of at least 30 thousand yen and limited liability companies and one member it is set in the amount of 100 thousand yen.
The main requirements for the directors and shareholders
WFOE may have one director (including a legal person) and one shareholder. Company's auditor must be specified.
Disclosure of the company’s beneficial to the government bodies
Information about WFOE type companies is not disclosed. It can be obtained only by the competent instances investigations.
All companies that are registered and operating in China are required to pay income tax at the rate of 25% of revenues. Businesses which only partly work in the country pay taxes only from what is earned in the country. VAT rate is 17%
RO-type business tax payments are made in accordance with the representation costs.
For all companies which are operating in the territory of China, it is necessary to carry out accounting and audit.