Shanghai Free Trade Zone

Register your company in the Shanghai Free Trade Zone.

Shanghai Free Trade Zone

The Shanghai Free Trade Zone is China’s first economic Free Trade Zone (FTZ)  is crafted to streamline trade processes, minimize bureaucratic hurdles, and establish a more appealing investment climate for international companies. It provides various incentives for enterprises, including lowered tariffs, streamlined customs processes, and increased flexibility in foreign currency conversion. 

China Free Trade Zone Company Registration Procedure

Your company registered address must be within the Free Trade Zone in Shanghai in order to qualify for Free Trade Zone benefits.

Company Name & Address

We collect & prepare documents for online application via MOFCOM and register for company name and address.

Business License

We apply for a "5 in 1" Business License from China AIC and prepare new company chops for the company.

Bank Account

We help open your corporate bank account, social insurance account and housing fund account in leading national banks.

VAT Registration

We submit your business license & required documents for tax registration in the Chinese bureau.

Special Licenses ( Optional )

  • Import / Export License
  • Food & Beverage License
  • Alcohol License
  • Medicine License

  • Tax & Accounting Support

    Preparing Monthly Reports, Issuing Invoices and filing monthly & quarterly tax returns.

    Benefits of the Shanghai FTZ

    Import Tax Exemptions

    Goods within the TFZ enjoy import tax exemption until they are transferred outside of the zone or warehouse. Import taxes are deferred until the goods are moved out of the FTZ.

    Quick Custom Clearance

    Experience swift and efficient customs clearance procedures that prioritize speed and efficiency. Enjoy a rapid and streamlined process for customs clearance, ensuring prompt handling of shipments.

    Currency Exchange

    There are no fees for converting major currencies in the currency exchange, ensuring a free and favorable exchange rate. Converting major currencies is offered at no additional charges.

    Open a WFOE in the Shanghai Free Trade Zone

    Trading WFOE

    Trading WFOE

    Trading WFOE helps in providing license to carry out import & export activities in China. It allows foreign investors to enter in trade agreements with local chinese suppliers / companies, conduct sales & distribution and many more. It a favorable option for foreign companies seeking to expand their trading operations in China.

    Trading JV

    Trading JV are essentially consulting JV armed with an import/export license and other licenses for specialty products. 

    open a trading company in Hong Kong

    Frequently Asked Questions

    Yes, TopFDI can register your trading company in the Shanghai Free Trade Zone.

    Economic policies in the Shanghai Free Trade Zones (FTZs) are strategically tailored to benefit various industries, with specific initiatives designed to attract particular businesses to designated areas. These policies differ based on the government’s strategic planning for each sector within the regions. Initially, the FTZs focused primarily on export and import operations, aimed at drawing more trading companies.

    Since 2016, the objectives and policies of FTZs across China have diversified, reflecting regional variations in economic goals. In general, Free Trade Zones provide significant incentives such as tax advantages along with enhanced services and infrastructure to support business operations. These benefits are aligned with the broader aim of boosting economic growth and attracting foreign investment in targeted sectors.

    As of May 2021, there are 21 Free Trade Zones in China:

    • Shanghai (2013)
    • Guangdong (2015)
    • Tianjin (2015)
    • Fujian (2015)
    • Chongqing (2016)
    • Sichuan (2016)
    • Shaanxi (2016)
    • Henan (2016)
    • Zhejiang (2016)
    • Hubei (2016)
    • Liaoning (2016)
    • Hainan (2018)
    • Jiangsu (2019)
    • Shandong (2019)
    • Hebei (2019)
    • Heilongjiang (2019)
    • Guangxi (2019)
    • Yunnan (2019)
    • Beijing (2020)
    • Anhui (2020)
    A WFOE is short for Wholly Foreign Owned Enterprise. A WFOE is a 100% foreign-owned (individual or corporate) limited liability company able to generate profit, invoice clients and hire local / foreign employees in China.

    Yes, a WFOE can fully carry out business in China in line with its agreed business scope. It can issue local currency invoices to domestic customers, and make profits from its activities.

    Yes, a Wholly Foreign-Owned Enterprise (WFOE) is fully authorized to operate within its approved business scope in China. It can bill domestic customers in local currency and earn profits from its business activities.

    The government considers several factors when issuing work visas, including the company’s registration duration, tax history, and the number of local employees. However, this does not apply to shareholders of a new company, as they (whether local or foreign) will always be granted a work visa.

    While there is no longer a fixed minimum capital requirement for setting up a Wholly Foreign-Owned Enterprise (WFOE) in China, following the 2016 regulatory changes, most WFOEs will still need a capital injection. The appropriate amount of capital, reviewed by local authorities during the application process, should be determined strategically to align with business and tax considerations from the outset.

    The required capital can vary significantly depending on the type of business; for example, a small consulting firm will need considerably less than a large manufacturing setup. As a rule of thumb, the capital should be sufficient to sustain the WFOE’s financial commitments until the business becomes self-sufficient, typically projected at about one year. The regulations now offer more flexibility in the timeline for capital contribution than in the past.

    It’s crucial to set the capital level correctly at the formation stage. If the capital is set too low, any further injections may be taxed as income, and although additional contributions are permitted, the approval process can be lengthy and cumbersome. Conversely, setting the capital too high could unnecessarily tie up funds that might be more useful elsewhere, and such funds can be challenging to reallocate later.

    Registering a Wholly Foreign-Owned Enterprise (WFOE) in China offers several advantages for foreign investors and businesses looking to operate within the Chinese market. Here are some key benefits:

    1. Full Control and Ownership: Unlike joint ventures, a WFOE allows foreign investors to have complete control over their business operations without the need for a Chinese partner. This control extends to business strategy and revenue management, allowing for independent decision-making.

    2. Intellectual Property Protection: Operating as a WFOE enhances the ability to protect intellectual property rights within China, a critical consideration for many businesses. The structure minimizes the risks associated with IP theft or misuse that can occur in partnerships.

    3. Profit Repatriation: WFOEs can legally repatriate profits out of China to their parent company overseas. This freedom to transfer funds is a significant advantage for foreign companies looking to invest in China while maintaining control over their revenues.

    4. Access to Mainland China Markets: A WFOE can legally conduct business and generate revenue within Mainland China. It can issue local invoices (Fapiao), which is essential for doing business with Chinese companies that require official receipts for accounting and tax purposes.

    5. Eligibility for Incentives: WFOEs may qualify for certain tax incentives or subsidies provided by local or regional governments, depending on the industry and location. These incentives can significantly reduce operating costs and enhance business viability.

    6. Operational Flexibility: Recent regulatory changes have introduced more flexibility in the capital requirements and operation of WFOEs. This flexibility allows businesses to adjust their strategies according to market conditions and business needs.

    7. Simpler Exit Strategy: Compared to joint ventures, WFOEs can offer a more straightforward exit strategy. The dissolution processes are generally more within the control of the foreign owner, assuming compliance with local regulations.

    These advantages make WFOEs a preferred choice for foreign entities aiming to establish a fully controlled subsidiary in China, tailor their operations specifically to the Chinese market, and manage their investments directly.

    1. Name Approval and Registration The initial step to establishing a WFOE in China involves selecting a compliant name and obtaining approval. The name must adhere to Chinese company registration laws, incorporating the company’s industry or brand, the operating region, and must end with “Company Limited.” During the approval process, the following will be examined:

    • Name availability, which can be checked on the SAIC website.
    • Exclusion of restricted words like “China,” “State,” or “National.”
    • Absence of foreign characters or symbols.
    • Clarity and non-misleading nature of the name. Remember, the name not only reflects your brand’s identity but also impacts its perception due to the characteristics of Chinese characters.

    2. Office Space Rental Prior to applying for WFOE incorporation, secure a lease for office space in the intended city of registration, valid for at least a year from the registration date. Ensure a clause allows for lease termination if registration is denied or complicated.

    3. Environmental Impact Assessment (For Manufacturing WFOEs) Manufacturing WFOEs must undergo an environmental impact assessment by a certified agency to obtain approval from the local environmental protection authority. This assessment varies by the operation’s scale and its environmental footprint.

    4. Online Registration through MOFCOM The registration process, now simplified, involves an online submission which is quicker but demands precise and complete documentation. This streamlined method does not accommodate discussions with authorities during submission.

    5. Applying for a ‘5 in 1’ Business License After MOFCOM approval, apply for a ‘5 in 1’ business license from the local Administration of Industry and Commerce (AIC). This license consolidates what were previously separate applications:

    • Business license
    • Tax registration certificate
    • Organization code certificate
    • Social security registration certificate
    • Statistical registration certificate

    6. Company Chops Post-registration, apply for the company chops or seals through the Public Security Bureau. These chops are essential for signing official documents and should cover various operational needs like financial, invoice sealing, and customs.

    7. Opening Bank Accounts With the chops, open at least two bank accounts for the WFOE: a local currency RMB account for daily operations and tax payments, and a foreign currency account for capital injections from abroad.

    8. VAT Registration Register the WFOE for VAT with the local tax bureau, choosing between ‘general’ and ‘small scale’ categories based on the company’s sales volume and strategic tax planning.

    9. Customs and Import-Exit Registration (For Trading WFOEs) Trading WFOEs need additional registrations for import-export activities, including an import-export license, customs registration, and registration with the Entry-Exit Inspection and Quarantine Bureau.

    10. Employee Contracts and Registrations Though not required before trading begins, it’s advisable to issue formal contracts to local employees and register them for tax and social benefits. This secures the employment structure from the outset.

    Each of these steps plays a crucial role in smoothly launching and operating a WFOE in China.

    A WFOE must have an executive director or a board of directors, in addition to one or more independent supervisors who monitor the performance of both the directors and the company as a whole. Additionally, a general manager, who may also serve as a director, is essential for managing daily operations. The composition and requirements for these governing bodies are specified by regulations and vary depending on the size of the company.
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