Hainan Province lies at the southernmost tip of China, facing Guangdong Province in the north across the Qiongzhou Strait; the Democratic Republic of Vietnam in the west across the Beibu Gulf (Gulf of Tonkin), and Taiwan Province in the east across the South China Sea. To the south and southeast it is bounded in the South China Sea by the Philippines, Brunei and Malaysia. Encompassing Hainan Island, Xisha Archipelago, Zhongsha Archipelago and Nansha Archipelago as well as their dependent waters, Hainan Province covers a land area of 35,000 square kilometers and a sea area of approximately 2 million square kilometers. Hainan Island is China's second largest island after Taiwan, with an area of 33,900 square kilometers (not including its satellite islets). Zengmu Shoal of Nansha Archipelago is the southernmost part of Chinese territory.
Haikou sits at the northern tip of Hainan Island. As the capital city of Hainan, Haikou is the provincial administrative, economic, cultural and transportation hub of the province, as well as the largest city within the area. Situated along a stretch of long coastline, the province is rich in natural resources and is also known as the €Coconut City'
Located at the southern tip of Hainan Island, Sanya is the nation's southernmost city. It is one of only two prefecture-level cities in the Hainan Province (the other being Haikou). As a renowned tourist city in China, tourism is the most important industry in Sanya's service sector. Dubbed the "Oriental Hawaii", Sanya has the most beautiful coastal scenery in Hainan. A state level holiday resort was set up in Yalong Bay. Four of the biggest bays in Sanya are Dadonghai, Sanya, Haitang, and Yazhou. Other attractions include Cape Tian-Ya-Hai-Jiao, the "Lu Hui Tou", Wuzhizhou Island and the Tiger & Crocodile Centre
Hainan's pillar industries encompass agriculture, tourism, petrochemical industry, electronics and information, and marine bio-pharmaceutical industry.
There are three principal business models for foreign companies seeking to establish themselves in China : Joint Ventures, Wholly Foreign-Owned Companies, and Representative Offices (ROs)
The Wholly Foreign Owned Enterprise (WFOE or WOFE) is a Limited liability company wholly owned by the foreign investor(s). In China, WFOEs were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology. However, after China's entered into the WTO, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well. With that, any enterprise in China which is 100% owned by a foreign company or companies can be called as WFOE.
Foreign investors can now determine an organizational structure according to the operations of their enterprises at their own discretion. Such potential investors should approach the appropriate government departments for a better understanding of the legal procedures involved in setting up a business in China.
The procedure to Setting up WOFEs
Stage 1: Preliminary approval - Project Proposal
The application procedure for setting up a WOFE is simpler. The project proposal will be prepared by the foreign investors and submitted directly to local authorities. The foreign investor may appoint a local agent to liaise with the government. To do so, he has to sign an authorization letter stipulating the agent's scope of services, responsibility and fees.
Generally, the authority will give an official reply within 30 days upon receipt of the proposal and other relevant documents. The approval or rejection letter will be issued to the foreign investor. If a favorable reply is received, the foreign investor can proceed to register the company's name at the local AIC.
The report must contain information regarding the objectives of the WOFE, business scope, scale of operation, products to be produced, technology and equipment to be used, land area required, conditions and quantities of water, electricity, gas and other forms of energy resources required, and requirements for public facilities.
Stage 2: Formal approval - Articles of Association
After the foreign investor receives a written reply from the relevant government authorities, a formal application supported by all the required documents should be filed with the local Ministry of Commerce at a county, municipal or provincial level. After receiving the formal approval, the foreign investor should apply to the Ministry of Commerce again for an approval certificate by presenting all the necessary documents.
The required documents include the application letter for establishing the WOFE; a feasibility study report (if any), articles of association, list of legal representatives (or Board of Directors), the foreign investor's legal papers and credit report, a list of materials to be imported, written replies from the local approval authorities at county level or above, application for registration of the name of the enterprise approved by the provincial or municipal administration AIC, comments on the project by various government departments such as environmental protection, fire services, health and land administration. In the case where two or more foreign investors are involved, copies of the contracts signed by them should be submitted to the approval authority for their records.
Stage 3: Business License
Upon collection of the approval certificate, an application for a business license has to be filed with the provincial or municipal AIC within 30 days. The local AIC will issue the business license within 10 working days to projects that have passed the examination. Likewise, the date the business license is issued will be considered the official date of the establishment of the enterprise.
Having acquired the business license, the WOFE has to finish up with procedures such as applying for an official seal and enterprise code, opening a bank account, and registering for tax payment and customs declaration with the local public security, technical supervision, taxation, customs, finance, foreign exchange administration, banking, insurance and commodity inspection departments.
Compared to registering a business in most Western countries, registering a business in China is challenging work filled with paperwork and bureaucratic red tape. It is practically impossible to properly complete the registration process without a qualified agency. Be sure that the agency is qualified and the agency has good connections and relationships with the various local authorities, and that they possess comprehensive knowledge about the numerous important aspects involved with legally and properly registering a WFOE.
Haikou sits at the northern tip of Hainan Island. As the capital city of Hainan, Haikou is the provincial administrative, economic, cultural and transportation hub of the province, as well as the largest city within the area. Situated along a stretch of long coastline, the province is rich in natural resources and is also known as the €Coconut City'
Located at the southern tip of Hainan Island, Sanya is the nation's southernmost city. It is one of only two prefecture-level cities in the Hainan Province (the other being Haikou). As a renowned tourist city in China, tourism is the most important industry in Sanya's service sector. Dubbed the "Oriental Hawaii", Sanya has the most beautiful coastal scenery in Hainan. A state level holiday resort was set up in Yalong Bay. Four of the biggest bays in Sanya are Dadonghai, Sanya, Haitang, and Yazhou. Other attractions include Cape Tian-Ya-Hai-Jiao, the "Lu Hui Tou", Wuzhizhou Island and the Tiger & Crocodile Centre
Hainan's pillar industries encompass agriculture, tourism, petrochemical industry, electronics and information, and marine bio-pharmaceutical industry.
There are three principal business models for foreign companies seeking to establish themselves in China : Joint Ventures, Wholly Foreign-Owned Companies, and Representative Offices (ROs)
The Wholly Foreign Owned Enterprise (WFOE or WOFE) is a Limited liability company wholly owned by the foreign investor(s). In China, WFOEs were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology. However, after China's entered into the WTO, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well. With that, any enterprise in China which is 100% owned by a foreign company or companies can be called as WFOE.
Foreign investors can now determine an organizational structure according to the operations of their enterprises at their own discretion. Such potential investors should approach the appropriate government departments for a better understanding of the legal procedures involved in setting up a business in China.
The procedure to Setting up WOFEs
Stage 1: Preliminary approval - Project Proposal
The application procedure for setting up a WOFE is simpler. The project proposal will be prepared by the foreign investors and submitted directly to local authorities. The foreign investor may appoint a local agent to liaise with the government. To do so, he has to sign an authorization letter stipulating the agent's scope of services, responsibility and fees.
Generally, the authority will give an official reply within 30 days upon receipt of the proposal and other relevant documents. The approval or rejection letter will be issued to the foreign investor. If a favorable reply is received, the foreign investor can proceed to register the company's name at the local AIC.
The report must contain information regarding the objectives of the WOFE, business scope, scale of operation, products to be produced, technology and equipment to be used, land area required, conditions and quantities of water, electricity, gas and other forms of energy resources required, and requirements for public facilities.
Stage 2: Formal approval - Articles of Association
After the foreign investor receives a written reply from the relevant government authorities, a formal application supported by all the required documents should be filed with the local Ministry of Commerce at a county, municipal or provincial level. After receiving the formal approval, the foreign investor should apply to the Ministry of Commerce again for an approval certificate by presenting all the necessary documents.
The required documents include the application letter for establishing the WOFE; a feasibility study report (if any), articles of association, list of legal representatives (or Board of Directors), the foreign investor's legal papers and credit report, a list of materials to be imported, written replies from the local approval authorities at county level or above, application for registration of the name of the enterprise approved by the provincial or municipal administration AIC, comments on the project by various government departments such as environmental protection, fire services, health and land administration. In the case where two or more foreign investors are involved, copies of the contracts signed by them should be submitted to the approval authority for their records.
Stage 3: Business License
Upon collection of the approval certificate, an application for a business license has to be filed with the provincial or municipal AIC within 30 days. The local AIC will issue the business license within 10 working days to projects that have passed the examination. Likewise, the date the business license is issued will be considered the official date of the establishment of the enterprise.
Having acquired the business license, the WOFE has to finish up with procedures such as applying for an official seal and enterprise code, opening a bank account, and registering for tax payment and customs declaration with the local public security, technical supervision, taxation, customs, finance, foreign exchange administration, banking, insurance and commodity inspection departments.
Compared to registering a business in most Western countries, registering a business in China is challenging work filled with paperwork and bureaucratic red tape. It is practically impossible to properly complete the registration process without a qualified agency. Be sure that the agency is qualified and the agency has good connections and relationships with the various local authorities, and that they possess comprehensive knowledge about the numerous important aspects involved with legally and properly registering a WFOE.