South China regional highlights
Guangzhou and Shenzhen
Foreign trading companies registered in free trade zones (FTZs) are, in theory, allowed to expand their business scope to enjoy the rights of import/export and distribution in China now widely conducted through foreign invested commercial enterprises (outside FTZs). In practice, however, we have found that some of the FTZs are not implementing this locally for the time being, and still force FIEs to use local agents and traders to facilitate their transactions.
Usually, the expansion of the business scope will need to be accompanied by an increase of registered capital.
We have recently supervised a number of set ups in various FTZs, which applied different practices and regulations to the same investment scenario, even within the same city; it is therefore advisable to seek professional help and compare the practices in different zones before a decision is taken.
Not all the districts in Guangzhou are open to the registration of representative offices (ROs) of foreign companies. Currently, ROs were not allowed to be set up in the districts of Panyu, Huadu, Conghua and Zengcheng. We recommend that you check with the local authorities that you are lawfully allowed to register your local entity, especially before you commit to any lease agreement.
A labor law training program for the chief representatives of foreign companies ROs in Dongguan has been established by the local authorities. This now a compulsory step during the set up process for ROs. However, rather than attend yourself, you could authorise, through a power of attorney, local RO staff to attend the course on your behalf.
Dezan Shira & Associates maintain offices in Guangzhou and Shenzhen, advising foreign investors on legal administration, corporate establishment, due diligence and tax policy in the city. Please contact Rosario Di Maggio in Guangzhou or Alberto Vettoretti in Shenzhen for more information.