Malaysia Hotline: +603- 2141 8908
Setting
up a Wholly Foreign Owned Enterprise (WFOE) can be a lengthy and complex
process. Once a WFOE is set up, opening up branch offices is the easiest way to
expand and much less bureaucratic and expensive than setting up a new WFOE.
Many supermarket chains use this strategy to expand to local markets.
Generally,
it needs to be differentiated between dependent and independent branch office.
A dependent branch is not autonomous. It can maintain contacts, can be involved
in marketing activities and develop new business relationships but is not
allowed to independently participate in business transactions, because it cannot
issue official invoices (fapiaos). This article is only about independent
branches (thereinafter simply referred to as “branch” or “branch office”) as it
is the most common form.
Advantages of setting up a branch
office instead of relying on the parent company include:
A branch
office has its own business license and seal, is allowed to sign business
contracts on its behalf, can have income and hire employees. Branch offices can
provide invoices (fapiaos) to their customers and have a tax ID .A branch
office has no registered capital. Therefore, compared to setting up new legal
entity it is a cost-effective way to expand throughout Shenzhen with a branch
office it might be easier to engage in business operations with local companies
that are far away from the parent company. The branch entitles to apply for
working visa and the appropriate Hukou for employees.
Some of the disadvantages
include:
The
parent company is liable for actions of the branch office Business scope is
limited and has to be the same as the one from the parent WFOEA branch office
is not allowed to export or import on its own (even if the business scope of
the parent WFOE is trade) The process of establishing a branch office is
similar to setting up a WFOE but much faster and certain steps are not
necessarily required (e.g. registration with SAFE).
It
usually takes around one month but it might take longer if certain licenses are
needed. Before any further steps, the registered capital of the parent company
must be verified.
1. Step:
Ensure all necessary permissions are in place for the branch registration at
the desired premises. This should be done in liaison with the landlord.
2. Step: Apply for business license at the local
authority. All necessary application document need to be completed in Chinese.
3.
Register at tax authorities.
It is
important to register for taxes at the Local and National Tax Bureau. The
National Tax Bureaus (and its offices) are responsible for collecting taxes for
the PRC government and the local tax bureaus (and offices) are responsible for
collecting taxes for local governments.
4.
Register at other relevant authorities.
This
includes for example: Enterprise code registration with the Quality and
Technology Supervision Bureau, foreign exchange registration at the State
Administration of Foreign Exchange (if required), registration at the Ministry
of Finance (if required) and the National Bureau of Statistics (if required).
5.
Register for the necessary stamps of the branch.
This has
to be done with the Public Security Bureau. A financial stamp, a branch stamp
and a stamp for the person in charge of the branch are required. In Shenzhen
official documents are only valid when they are chopped. Therefore the company
stamps functions as a signature.
6. Open
a business bank account.
A RMB
bank account needs to be opened. Also it is advisable to open a foreign
currency bank account.
Contact
us
If
you have further queries, please contact Tannet
24
hours Malaysia hotline：603-21418908;
24
hours Hong Kong hotline：852-27837818;
24
hours Hong Kong hotline：86-755-
36990589;
Email:
mytannet@gmail.com
TANNET GROUP : http://www.tannet-group.net, http://en.tannet.com.my