Establishing a Foreign-Invested Printing Enterprise in China
Apr. 3 – China’s General Administration of Press and Publication (GAPP) has recently released the “Supplementary Provision II for the Interim Provisions on Establishment of Foreign-Invested Printing Enterprises (Decree No. 54 of GAPP, hereinafter after referred to as ‘Supplementary Provision II’),” which came to effect on January 1, 2013.
Supplementary Provision II allows service providers from Hong Kong and Macau to establish joint venture enterprises in Qianhai and Hengqin on a pilot basis and engage in the printing business of publications and other printed materials. However, the portion of shares owned by such service providers in the joint venture enterprise cannot exceed 70 percent.
Moreover, according to the “Supplementary Provision I for the Interim Provisions on Establishment of Foreign-Invested Printing Enterprises” released by the GAPP in 2008, printing enterprises established in the Mainland by service providers from Hong Kong and Macau and engaged in the printing of packages and decoration of printed materials, its minimum registered capital shall be subject to the requirements for local enterprises. Meaning, the minimum registered capital of such enterprises has been lowered from the previous RMB10 million to RMB1.5 million.
With the view to promote the healthy development of printing industry in the country, China issued the “Interim Provisions on Establishment of Foreign-Invested Printing Enterprises (Decree No. 16 of GAPP, hereinafter referred to as ‘Provisions’)” in 2002, which outlines the eligibility requirements and application procedures for establishing a foreign-invested printing enterprise in China. Detailed information can be found below.
As provided by the Provisions, foreign printing enterprises in China include the following two types of enterprises.
- Sino-foreign joint venture enterprises that are jointly invested and established by foreign institutions, corporations or enterprises and Chinese companies or enterprises; and
- Wholly-foreign owned printing enterprises.
China permits Sino-foreign joint venture enterprises to engage in the printing of publications, printing of packages, and decoration of printed materials, and printing of other printed materials. However, wholly-foreign owned printing enterprises may only engage in the printing of packages and decoration of printed materials.
The following conditions shall be satisfied when establishing a foreign-invested printing enterprise in China.
The Chinese and foreign investors applying to establish the foreign-invested printing enterprise shall be legal persons who can undertake civil liabilities independently, and have direct or indirect experience in printing operations and management.
The foreign investors of the printing enterprise shall meet one of the following requirements:
- Be able to provide an internationally advanced operations and management model as well as experience
- Be able to provide internationally advanced printing technology and equipment
- Be able to provide sufficient funds
The foreign-invested printing enterprise shall be established in the form of a limited liability company.
The registered capital of the foreign-invested printing enterprise engaged in the printing business of publications, and printing of packages and decoration of printed materials shall be no less than RMB10 million; while the registered capital of printing enterprises engaged in the printing of other printed matters shall be no less than RMB5 million.
For Sino-foreign joint venture printing enterprises engaged in the printing business of publications and other printed matters, the Chinese investors thereof shall hold a controlling or dominant position. In particular, the chairman of a Sino-foreign joint venture printing enterprise engaged in the printing business of publications shall be a Chinese investor and its board of directors shall be composed of more Chinese members than foreign ones.
The operation period shall not exceed 30 years.
The application for establishment of a foreign-invested printing enterprise shall be made to the Provincial Press and Publication Administration Department and the following application documents shall be submitted.
- “Application Form for Establishment of a Foreign-invested Printing Enterprise”
- A feasibility study report
- A project proposal signed by the legal representatives of all investors which covers the following matters:
- Names and domiciles of all investors
- Names, legal representatives, domiciles, business scope, registered capital, and total investment of the foreign-invested printing enterprise
- Capital contribution and contribution amount of all investors
- Registration certification documents of all investors, identity certifications of legal representatives, and credit certificates of all investors
- A verification document from the relevant state-owned assets administrative department for the evaluation of the state-owned assets to be contributed
The Provincial Press and Publication Administration Department shall, within 10 working days upon receipt of all documents, present its preliminary examination opinion and relevant materials to the GAPP for examination and approval.
Where the GAPP has approved the application, the applicant should submit the application and relevant materials to its local Foreign Trade and Economic Cooperation Department for further approval.
In addition, the Provisions stipulate that foreign-invested printing enterprises are not allowed to establish branches in the country.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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