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How to Structure Your Business in China

How to Structure Your Business in China. Hao Wang. Questions from Business Clients. What if I do not plan to make any investment now, but I still need to do business in China? I know there is a market for our products and I am ready to go. What do I do next?

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How to Structure Your Business in China

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  1. How to Structure Your Business in China Hao Wang

  2. Questions from Business Clients • What if I do not plan to make any investment now, but I still need to do business in China? • I know there is a market for our products and I am ready to go. What do I do next? • I would like to start an on-line gaming business in China, but I heard there are restrictions relating to foreign ownership.

  3. Structure Options • Representative office • Wholly-Owned Foreign Enterprise • Sino-Foreign Joint Venture • Trust structure

  4. Representative Office • Liaison and communication • Easy to set up • Restrictions on direct recruitment of local staff • Tax for cost center • Rep office plus local partner

  5. WOFE • Guidance on Foreign Investment in different industries • Total investment vs. registered capital • Holding your subsidiaries in China via an investment company

  6. WOFE [Part One: Industry Guidance] • Mechanism used for macro economic control • Different editions published at different times reflect policy orientation at time of publication • Encouraged, restricted and prohibited categories

  7. WOFE [Part Two: Total Investment vs. Registered Capital] • Total investment=registered capital+debt • Ratio • Why registered capital matters * name, e.g.. XYZ(China) Co., Ltd. * match business operation scale * capital increase approval • Injection schedule

  8. Joint Venture • Why a JV is needed * Restrictions on equity percentage held by foreigners * Difficulties in setting up a WOFE (e.g. banks) * Regulatory hurdles in foreign mergers & acquisitions • Two forms of JV • Sweet or sour marriage?

  9. Trust Structure • Type(s) of Angelo-Saxon trusts that are recognized under PRC Trust Law 2001 • Commercial trusts are widely used as investment vehicles • Savvy foreigners use trust structure to get around regulatory hurdles (e.g., on-line gaming business)

  10. Legalmall: One Stop Shop for Doing Business in China • Legal Document Templates • Company Search: find who you are dealing with in China • Service: Set up a company in Beijing/ HK • Ask a Lawyer • FAQ: tips you need to know

  11. Legalmall: a platform to find Clients from China • Chinese clients seek answers from attorneys from multiple jurisdictions • Chinese clients check foreign partners background information • Chinese clients need foreign legal templates

  12. Thank You! Wh@rayyinlawyer.com

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