Along with the implementation of the Measures on the Administration of Foreign Investment in Commercial Fields (hereinafter referred to as "Measures"), the former regional restrictions on foreign investors are abolished. Moreover, business scopes are able to be expanded, and the requirement for registered capital is largely reduced. Since flexible modes of business operations care allowed under the Measures, foreign investors can set up joint venture, cooperative or wholly owned enterprises; or they can franchise others to open stores. Moreover, they can be engaged in one or more selling operations simultaneously, and more importantly, they are entitled to import-export power automatically conditional on the approval. Therefore, the implementation of the Measures is favored by overseas investors.

Registered Capital

Generally no less than RMB500,000 (which should be in line with the scale of operation)

Categories of Establishment

• Wholesaling or trading business
• Retailing business
• Both of the above

Scope of Business

•  Foreign investment enterprises engaged in wholesaling or trading business
  • Commodity wholesaling or trading
  • Commission agency
  • Commodity Importation/Exportation
  • Other related supporting business
  • Franchising others to open stores
  • They can be engaged in one or more selling operations with the commodity lines to be noted in the contracts or the articles of association concerning the scope of business.
• Foreign investment enterprises engaged in retailing business
  • Commodity retailing
  • Self-supported commodity importation
  • Purchase of domestic products for exportation
  • Other related supporting business

Required Documents

• Investor's qualification certificate of entity, or natural person's ID card
• Directors, supervisors and mangers' appointment documents and ID cards
• Legal representative's appointment document and ID card
• Certificate on assessment of capital from banks
• The certificate for right of use or the contract for lease of house of the proposed store to be opened
• Import/export product catalog
• Lease contract or certificate of title
• Documents or certificates for earlier setup examination and approval

Required Time

About 90 workdays

Taxes Involved in Operation of Foreign Investment Enterprises

• Value Added Tax
  • General Value Added Tax Payers pay VAT at 17%
  • Small-scale Value Added Tax Payers pay VAT at 3%
  • General Value Added Tax Payers refer to commercial enterprises with annual sales value exceeding RMB 800,000 and with established financial system, while commercial enterprises failing to meet the requirements are small-scale Value Added Tax Payers. Those qualified as general Value Added Tax Payers can credit the Input Tax paid on purchase of goods against the output tax paid on sales. Those empowered to import/export are entitled to free export and refund. However, small-scale Value Added Tax Payers cannot credit the tax paid on purchase, while they are entitled to free export but no refund.
• Corporate Income Tax
  • Income tax rate is 25%
  • Small scale and small profit companies are subject to corporate tax rate of 20%

  Criteria for a small-scale and small profit company: a company that cannot engage in business restricted and prohibited by the PRC government and its annual taxable profit does not exceed $300,000, with staff less than 80 and total assets not exceeding $10 million

• Tariff

  Tariff rates are generally subject to the prices of import /export goods, which shall be equal to the quantity of import /export goods multiplied by quoted price per unit.