Setting Up Manufacturing Operations in China

May 2005 China Briefing

This issue takes a thorough look at establishing Manufacturing, Processing & Assembly operations in China - everything from application procedures, legal and tax structuring, claiming back VAT upon export, obtaining tax incentives as well as provide advise on registered capitalization, debt financing, and other structural issues to cater for when considering establishing a manufacturing unit in China. The main article "Establishing Manufacturing Operations in China - Setting Up Manufacturing, Processing and Assembly Production Units" is by Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates, and deals with issues such as the structural differences and considerations that need to be made between entities exporting all their production and those selling part onto the China domestic market. Matters concerning land use rights, utilities provision, profits repatriation, tax minimization, the role of the Chinese labor union, management structures, and exit strategies are all discussed. A second article, by Mack Fan, of Dezan Shira & Associates Shanghai Office "China Export Tax Rebates - Getting Your Money Back From the Chinese Government" deals with claiming back VAT upon export of China purchased components and other goods, and describes the procedural aspects and qualifications required to obtain such refunds. "Extending Your China Tax Holidays - Using Withholding Tax Mechanisms to Prolong Your Tax Efficiencies" is another Chris Devonshire-Ellis piece, while the issue is completed with Regional Updates. Alberto Vettoretti, Regional Partner, Dezan Shira & Associates South China, "New State Administration of Foreign Exchange Regulations on Foreign Invested Enterprise Debt Financing", Sabrina Zhang, Regional Partner, Dezan Shira & Associates Beijing comments on “China Leasing Industry Liberalisation Measures Announced by the Ministry of Commerce", and Jason Chen, Associate, Dezan Shira & Associates Shanghai discusses the tax implications relating to "The Sale of Goods Stored in Shanghai Waigaoqiao Bonded Zone To Externally Located Companies"