Working in China

[BenderBends]

was wondering a couple things about working in china. before we start paying for lawyer consultations and such:

1. Is it possible to hire staff in china through employment agencies without actually having your company registered in china?

2. Assuming no....does anyone know what type of fees/tax is due to establish a representative office in china? i want to expand our company, but want to know what type of yearly costs would be associated with it to see if its worth it, or if its cheaper/safer to just continue employing HK only.

[pat_togo]

1. No, at least not legally. As pension/social security/payroll tax can be paid only for staff working for a company legally registered in mainland China
2. About 10% of your operating expenses for the monthly tax. Registration fees would depend of the company you select, can be as low as 1000USD and as high as 20,000USD

[Football16]

You have good questions that I know our TEN - The Entrepreneurs Network - President knows very well as he did his expansion to China via CEPA. Others do it other ways and say they don't need CEPA.

Check out our next event and come and ask for yourself.

[Football16]

A question just came up for us about billing a China company from HK. We won a RFP process for a China entity of a high end luxury brand to do background checks for their China staff. We have been doing this for their HK operations so that gave us an edge. The work will be done in HK. Their China company is a separate legal entity. We even met their executive here in HK! They came to see us!

We have no offices or operations in the PRC as yet. We just received the Supplier Agreement and this new client is asking if we do or if we have a "sister company" there where they can pay as they do not want to have to go through the local government approval process.

Not sure what the implications are to get someone to take the payment for us and how that would work. It is not a huge monthly contract but a good start with them and I'd like not to have to turn down the work for this small impediment nor do I want to have to establish a rep office there (not now).

Any ideas (legal of course) as we do not or will not break any rules here or anywhere else for that matter.

[Football16]

A question just came up for us about billing a China company from HK.

We won a RFP process for a China entity of a high end luxury brand to do background checks for their China staff. We have been doing this for their HK operations so that gave us an edge. The work will be done in HK. Their China company is a separate legal entity. We even met their executive here in HK! They came to see us!


Not sure what the implications are to get someone to take the payment for us and how that would work. It is not a huge monthly contract but a good start with them and I'd like not to have to turn down the work for this small impediment nor do I want to have to establish a rep office there (not now).

We have no offices or operations in the PRC as yet. We just received the Supplier Agreement and this new client is asking if we do or if we have a "sister company" there where they can pay as they do not want to have to go through the local government approval process.

Any ideas (legal of course) as we do not or will not break any rules here or anywhere else for that matter.

An HK accountant who my business partner knows has some sort of PRC partner where they charge $150 monthly (not sure if HK or RMB) and $150 per transaction to take care of taxes in the PRC. I sent the guy back to find out what a transaction is. No one else had this problem????

Where is the Godless capitalist PDLM and others when you need them?

[PDLM]

I'm here, but I'm afraid doing business in China is something of which I have no experience whatsoever at the detailed level.

[MovingIn07]

Same here (as per my email) although I did just wonder why they couldn't send the money to their HK subsidiary and then to you!

[Football16]

Same here (as per my email) although I did just wonder why they couldn't send the money to their HK subsidiary and then to you!

Moving - I asked this same question of our COO but his view was that these are such separate entities here in HK as we now just signing up another component of theirs here he is not sure he wants to ask that.

I suggested that internal transfers like that could be handled on the books easily but somehow it is avoiding the local government approval procedure in China to pay this that the PRC company wants to avoid due to time and effort.

[jaykay]

Same here (as per my email) although I did just wonder why they couldn't send the money to their HK subsidiary and then to you!

2 reasons. They are a separate entity and secondly China government rules are extremely stringent in this area.

Been in this situation myself previously and we resolved it by opening a branch office initially. That was a couple of years back and we have a lot more presence now. Just a few thousand RMB to get an agent to set up the branch office, although I'd recommend a decent accountant to make things smooth - initially and through operation.

[altralazer]

Football16, I assume they don't want to necessarily pay your HK company as that would involve foreign exchange and thus the bureaucratic hassle.

Opening a rep office wouldn't do you any good either as it legally wouldn't be allowed to write invoices and receive payments (either on their own behalf or on behalf of the HK company). To be perfectly legal you'd have to consider opening a WFOE (Wholly Foreign Owned Enterprise); capital requirements, as has been mentioned before, depend on location and nature of business.

Nowadays "private contractors" become more unwilling to accept payments from an HK company for their work; they're avoiding social security payments and taxes by doing so. China has recently started to pay more attention to regular forex deposits on personal accounts in China.

Here's a great article about WFOEs in China:
http://www.articlesbase.com/corporat...n-1597537.html

It mentions that the minimum capital required to register a service WFOE can range from CNY 100k - 500k.