China is the world’s most populous country and its population is about 1.404 billion. Its total area is 9,600,000 square kilometers. In other words, it is the world’s fourth-largest country by area. It is the world’s second-largest economy on the basis of the nominal GDP. On the other hand, on the basis of purchasing power parity, China is the world’s largest economy. That’s why there are lots of benefits of starting a business in China. Lower costs, better services, higher output, quicker time and duplication capabilities are some of the major pros of starting a business in China. Like other countries, if you are going to start a business in China, you will have to follow some policies and regulations. A Detailed on policies and regulations for setting up a factory in China are given below by dissertation writing services UK;
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Find the best location
The first step to start a new business in China is to find out the best location. In order to find out the best location, first of all, you should complete the general plan for the factory. Its reason is that you will have to contact the local government for the purpose of getting the best location for your factory. Before allowing you to set up a factory in a particular district, the local government of this district will take an overview of the general plan and feasibility of the company. It is also necessary for you to provide a complete overview of the environmental and other feasibility issues to the local government.
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Form a WFOE
WFOE stands for Wholly Foreign Owned Entity. After determining the best location for your company, it is necessary for you to form a Chinese legal entity. In order to apply for WFOE, you will have to complete a legal process. The main points of this legal process are given below;
- First of all, you will have to complete a formal process for company formation. No doubt, it is a tedious process and you will have to consume lots of time to complete this process. Therefore, you should start this process as soon as possible. In order to complete this process, you will have to contact with lots of bureaucrats and these bureaucrats will ask you to verify lots of documents from your local government. Moreover, it is also necessary for you to follow some basic as well as detailed rules. The basic rules are provided by the local government in China and the detailed rules are provided by the local district government.
- After completing the formal process of the company formation, the next step is to follow some approval steps to operate the local factory. First of all, you will have to provide a detail that either the building of the factory will be owned or rented. Secondly, you will have to study the feasibility of the company with local professionals. Thirdly, you will have to create an environmental impact statement. At last, you will have to prepare the safety reports that are required for your project.
- Recently, a new Foreign Investment Law is approved by the PRC. This law is prepared in favour of the new factories. Therefore, it is also necessary for you to register your factory according to this law. Usually, you will have to follow this law in the middle of the work. Therefore, there is a possibility that this can become a cause delaying the construction work of your factory. This approval process will take at least 6 to 18 months.
- The fees of this approval process depend upon the approval process that we are handling. In this process, we have to follow the legal process of the formation of the company and it is also necessary for us to follow some other legal issues like IP registration and employers contracts etc.
- If you are going to purchase the parts for your factory from a factory outside of China, you will have to form a Chinese company as a trading company.
At last, to set up a factory in China takes a long time usually. Therefore, you should try to start the work of your company as soon as possible.
Conclusion
China is the world’s largest populous country and its economy is growing very rapidly. Therefore, it is valuable for you to set up a factory in China. Before setting a factory in China, you will have to follow a legal process. First of all, you will have to get permission from the local government. After that, you will have to form a WFOE. WFOE stands for Wholly Foreign Owned Entity.