So you've decided that this kind of company sounds perfect for starting a business in China. Great!
Now let's tackle the important question, which is that of setup costs.
There are 2 cost centres when it comes to opening your WOFE.
1.Setup costs
2.Registered capital
Hotline: 86-10-57473212 Email: jack@86startup.com
Setup Costs
You essentially have four options. Your choice will depend on how deep your pockets are and, more importantly, how much you value having a good job done.
1. International Law Firm
Large international law firms offer a premium business incorporation service.
You can expect 5-star service, staff that speaks different languages, and total professionalism.
The job will be done correctly and to the letter including helping you find an office, as these large firms have been around for many years and are well versed in setting up companies in all areas of China.
Drawbacks
Their costs can be high. The amount that you would have to pay may be as much as RMB100,000 for each company that you wish to incorporate in China. While this covers everything, the high cost makes it prohibitive for many SMEs.
You may also face a situation where the international firm¡¯s representatives aren't as 'hands-on' as a smaller firm's employees. You may not be kept informed of the progress due to the sheer number of clients they're handling at any one time. Some people prefer to keep close tabs on their project, so an international law firm may not be the best choice.
2. Mid-Size Local China Business Services Provider
This is where Hongda Business Services is placed, as we're a typical example of a mid-size local Chinese business services provider who has been around for a decade or longer.
Their role is to offer the same services as the international law firms, but at much more affordable prices, catering to everyone from SMEs up to global companies looking to set up a branch.
You can expect excellent service, hands-on representatives, and good local experience which helps them to speak to the appropriate people in the right offices and decrease incorporation times. They can also easily help you to find an office in which to base your company.
Whereas we cover Shenzhen, Guangdong province's PRD's other cities, and Hong Kong, other companies in different parts of China offer similar services for their respective areas.
Typically, setting up a WFOE in China with this type of firm will cost around RMB10-20,000.
Unlike large international firms, these companies care about and need your business, and so are likely to make a great effort to please clients at every turn.
Drawbacks
Languages other than English may not be offered.
The high level of professionalism offered by the international law firms probably won't be as stringently followed, but by Chinese standards, it should be good.
3. Sole Trading China Business 'Expert'
Often staff who have worked for a mid-size firm in China will decide that they are going to go it alone.
Some of these people are very capable of providing a decent level of service as they have been in the industry for a long time.
Typically they'd try to offer bargain basement prices for company setup. These could be in the range of around RMB10,000 or less.
Drawbacks
There is no guarantee that you will get good service as relying on one individual is always risky.
What you are sold may not be the facts. They may say that they can set up your kind of company, but it may be that they have never done this before and make mistakes during the incorporation period costing you time, money, and good standing with the local government of the city you wish to operate in.
They may not have much ability to help you locate a suitable office.
They will often be swamped with work and may not be able to give you the level of attention that you require.
4. DIY
You can always set up your own WFOE in China. That's no secret.
This is probably the lowest cost option and would come in at under RMB10,000.
Drawbacks
The process is going to be a nightmare for 99% of foreign companies due to:
- The paperwork and discussions being entirely in Chinese.
- The need to enter into dialogue with local government officials.
- Copious amounts of paperwork.
- No assistance is given by the authorities, leaving much guesswork for the uninitiated.
- Confusion about where to go to submit various paperwork, as there are several government offices involved.
- You need to find your own office and negotiate its contract with the local landlord.
Do you need to pay international prices to set up your company? Certainly not. But when you start looking for the cheapest option, you will soon find that what sounded like a bargain at the time will cost more later.
