The overall scale and full strength of China's industry have further enhanced during the past years, and China resides in the world's top spot as the most extensive manufacturer, China's Ministry of Industry and Information Technology (MIT) said on July 2017. China remains the world's top manufacturing destination owing to its both low-cost and upmarket manufacturing---thanks mainly to its access to abundant domestic reserves of minerals and metals. For factories based in China, this means effective, easy to access local supply chain for additional products and services.
Another reason why manufactures pick China is that of domestic demand of China's middle class's greater sophistication and purchasing power. China also has excellent infrastructure, has built a nationwide network of transport links and that includes highways, high-speed railways, deep sea ports and airports, illustrated by a recent KPMG report, entitled “infrastructure in China.”
With a limited company incorporated does not necessarily mean you can engage in any business activities, as is the case in some western countries. Manufacturing WFOE can only operate within the business scope approved by Chinese authorities. Other operations are subject to further approval.
For Manufacturing WFOE's registered capital requirements may vary depending on the industry and the location. So, if you can be flexible on location, shop around and compare regional differences. With much of China's eastern and southern coastal areas possessing sound import-export infrastructure, it may be more efficient to place the factory in one of the second-tier cities-----capital requirements and operating costs vary quite considerably.
The incorporation processing time depends on several factors. For the detailed advice and guidance, please send us more info about your business scope and business plan. How to set up a manufacturer in China? Please contact Business China for details.
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The evening of October 19, 2017, the Ministry of industry and information technology party secretary, Minister Miao Wei takes a new road to industrialization in group interviews said, "top-level design China manufacturing 2025", namely the policy system of 11 supporting documents of a primary file and has primarily formed. In the implementation of the relevant policies, these policies are not only applicable to enterprises in China, but also to foreign-funded enterprises. Miao Wei also disclosed that the future speed down the cost would continue to accelerate, a 5G commercial is expected to achieve in 2020.
Miao Wei said that in the past five years, China had been the world's largest manufacturing country and a significant Internet power regarding overall strength. Breakthroughs have made in areas such as aerospace, high-end equipment and a new generation of mobile communications. Regarding structural optimization, the supply-side structural reform is compelling. The growth of strategic emerging industries and advanced manufacturing industries continued to grow faster than all industrial growth. New modes of business are emerging. Among them, in the process of 'made in China 2025', we deeply feel that the central decision is very far-sighted, which is also in line with the reality of China's industrial development. Miao Wei said a large number of Chinese companies have stepped up innovation in research and development. They constantly improve their product technology and service quality, so that national brands can win consumers' ever-increasing consumer demand.
Experts at the conference noted that foreign-invested enterprises have a problem of adapting to the new normal of China's economy. Before 2005, foreign investment enterprises were more likely to see China's low-cost investment environment. By 2012, foreign investment enterprises were more likely to take a look at China's rapidly growing market environment. Since 2012, foreign investment enterprises have seen more growth in China's high-tech manufacturing and services industries. Foreign investors who are not adapting to the new normal are leaving China and moving to local or south-east Asia and South Asia. High-tech manufacturing and service sector foreign investment enterprises are still actively entering China. In the past 70 percent of foreign investment was in production. The proportion of foreign-owned enterprises in China is 11%, private enterprises 61% and state-owned enterprises 28%. Now 70% of foreign investment is in services, especially knowledge, technology and talent-intensive services.
The experts said that how to achieve the negative list management and pre-entry national treatment and improve the business environment is the focus of the next reform. As for the financial sector, the proportion of the state economy accounts for 90 percent, and conditions should be expanded to open up. In the future, our country needs to clarify further the strategic thinking of utilizing foreign capital and strive to realize the "three changes”: from the world factory to the world market and the world innovation center. From the paid-in capital to the registered capital, the diversion, the introduction, the integration of the development transformation; From preferential policies to demand guidance, supply-side cooperation, transparent period, global operation partner transformation.
After years of rapid growth, China's utilization of foreign capital has entered a substantial adjustment stage, which is a critical background reason for the change of international capital flow structure.
First, China has entered a new stage of investment development. There are many signs that direct investment in both directions, especially after years of rapid growth in the use of foreign capital, and it has averaged 10 percent a year since 1992. China has entered a new stage of investment development. Since 2015, foreign direct investment has exceeded the actual utilization of foreign capital for two consecutive years, and the long-term capital net output of the international balance of payments and financial accounts has realized. The theory of investment development cycle holds that a country's transformation from a net recipient to a net investor is a common phenomenon that accompanies economic development. In this process, the entry of direct capital will be entered into a new stage of stabilization and structural upgrading from one-way storage and flow expansion. The withdrawal and transfer of some foreign wealth are one of the most common manifestations. Therefore, from the perspective of the extended period of investment development, driven by the overall market environment and the transformation of economic and industrial structure, China's utilization of foreign capital has entered a substantial adjustment stage.
Second, the factor cost of enterprise management rises, a direct cause of the withdrawal of some international capital. It mainly includes first, labor cost increases. China's average human capital has been growing since 2006. According to the report of the Chinese Academy of Social Sciences, the average wage in China's manufacturing industry has significantly exceeded the majority of Southeast Asian countries and South Asian countries. The increase of labor cost has the most visible impact on labor-intensive industries, which has weakened the comparative advantage of traditional export-oriented manufacturing industry in attracting foreign investment. Second, land costs are rising fast. With the development of industrialization and urbanization and the influence of some short-term factors, land prices in China continue to increase. At the same time, since 2007, foreign investment enterprises, foreign enterprises, and foreign individuals have been included in the land use tax. Thus making the land cost of operating in China continue to increase. Third, environmental costs are more burdensome. In recent years, the environmental awareness of China's whole society has strengthened, and the environmental protection administration has enhanced. The pollution emission control measures caused by enterprises are becoming more and more stringent. At the same time, China's supervision of the environment has further strengthened. Under this background, the environmental cost burden of high pollution and high emission enterprises is increasing. Direct capital withdrawal from this area has become an inevitable trend.
Once again, local enterprises are improving. After years of accumulation, our domestic enterprises have gradually become mature in the market competition at home and abroad, and the level of technology, capital and management have improved significantly. Some local brands are beginning to emerge from the international scene. With the gradual weakening of the comparative advantage of foreign enterprises in multi-level, the competition pattern accelerates with local enterprises. Regarding the stage of the continuous improvement of the overall strength of enterprises, the competition of foreign capital in non-technology-intensive fields will stimulate first. In the traditional manufacturing sector, there are no technical differences between domestic and international enterprises. And local enterprises are more accurate and precise in the market, and are better at reducing various costs and have natural advantages. Thus gradually occupy market share, which has caused some foreign companies to squeeze out of the competition. It is foreseeable that the competition between international and foreign enterprises will further expand in the capital and technology-intensive fields. Competition pressure continues to increase in the production and operation of foreign companies in China. Earnings estimates for foreign capital production in China expected to be depressed, which has also become one of the factors for the withdrawal of foreign investment in China.
Finally, policy factors drive. One is the adjustment of foreign policy. After the international financial crisis, represented by America, Japan, and Germany, the developed countries have put forward a new round of industrial development plans, such as the United States and industrialization and the Internet industry, Germany's "4.0", Japanese industrial recovery plan, etc. These are intended to make up for the hollowing out of the local industry caused by the traditional international division of labor and the upgrading of the domestic industry and the promotion of domestic employment. The policy direction of developed countries has been adjusted, which provides favorable policies and market conditions for the migration of some enterprises' overseas production chains. Countries in Southeast Asia have also introduced preferential policies to undertake a new round of international industrial transfer. Second, domestic policy adjustment. The abolition of foreign capital super-national treatment, the foreign investment in the normal supervision scope. It also promotes the fair competition of domestic and foreign investment, which is the inevitable trend of foreign capital management in China. In 2008 the new "enterprise income tax law and its implementing regulations, after the enforcement of foreign investment enterprises and foreign enterprises initially perform reinvestment refund, royalty free and regular tax preferential tax policy has canceled. Foreign taxes rose from 15% to 25%. In recent years, the management of foreign investment in some areas has become more stringent, which has impacted some foreign companies' business strategy at home.
We will actively guide the adjustment of foreign investment and make foreign investment continue to play a role in China's industrial upgrading and upgrading
Foreign investment ushered in the era of "structural adjustment." We should focus on strengthening and reducing and avoiding short-term risks, forcing its positive play, making progress on this adjustment process smooth and orderly. We will actively guide foreign investment adjustment and make use of external capital structure optimization in the eastern and western regions. For the east part, foreign investment will accelerate the withdrawal of low-end manufacturing from the area, and governments at all levels should prepare accordingly. We should plan ahead. Tax, land, finance, political law and other functional departments should strengthen cooperation and enhance the sense of service. Realize the orderly and efficient operation of divestment. At the same time, we should further develop the advantages of the eastern developed regions, especially the critical provinces and cities in the coastal areas and the free trade zones. We will actively guide new entrants into the field of development in high-tech fields, especially in the catalog of foreign investment industry guidance. We will give full play to the decisive role of foreign investment in the adjustment of industrial structure upgrading and realize the transformation of economic growth in the eastern region as soon as possible. For the central and western areas, it is vital to further highlight the comparative advantages of lower labor and land prices. It stressed the development of the east linkage and the convenience of domestic logistics and transportation infrastructure. To attract the eastern region to evacuate foreign capital to the central and western areas. To realize the development of gradient industry, reduce the unfavorable influence of overflows of foreign capital to the southeast Asian region to our manufacturing industry.
We will improve foreign policy, optimize capital investment and use the capital environment. To realize the gradual improvement of capital investment, relevant laws, and regulations, the foreign investment law of the People's Republic of China will promulgate as soon as possible. The management of pre-establishment national treatment and negative list of foreign capital. We will give full play to the guiding role of the international investment industry guidance catalog and create favorable conditions for foreign investment in related fields. We will step up efforts to improve the domestic investment environment and strengthen policy coordination. To realize the practical cooperation of tax, customs, banking, foreign exchange, commodity inspection and other departments, the establishment of a favorable and stable capital environment is a must. We will promote investment promotion in various regions and provide more favorable conditions for multinational enterprises to set up R&D centers in China. Research and solve China's supporting funds and provide financial facilitation services. We will continue to promote the opening up of related services sectors such as business, foreign trade, air transport, project contracting and social intermediary.
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