China free zones

China free zones

Healy Consultants is pleased to offer our services for company set up in China’s special economic zones. The China Government recently set up a free trade zone in Shanghai. Please find an overview of the benefits offered by this free zone below:

    Register a free zone company in China
  • The free trade zone of Shanghai is located at an attractive location for the formation of a business in China: in the harbor area, near the exit of Yangtz River and Pu Dong international airport in Shanghai;
  • The zone also offers logistics services, such as warehousing space, procurement and distribution and supply chain management;
  • Customs duties and import taxes are exempt for goods transferring between the free zone and overseas destinations;
  • Businesses generating their income in international shipping, transporting, warehouse, and international shipping insurance activities are exempt from corporate tax;
  • There are no foreign exchange control on the companies registered in China free trade zones;
  • Favorable interest rates in financial market;
  • Cross-border use of RMB is allowed;
  • Companies registered in the Chinese FTZs can make customs declaration of their imported goods collectively; goods that need to transfer to waterways, airways and railroads can enjoy optimized and simpler customs clearance procedure;
  • Companies registered at Yangshan Free Trade Port Area can open offshore accounts to provide convenient financial settlement for overseas business;
  • If the registered capital is above RMB800,000, a trading China wholly foreign-owned enterprise can apply for the 17% Value Added Tax (“VAT”) invoice as General VAT Payer qualification. After getting this qualification, the company can enjoy the tax rebate and deduction of input VAT which is incurred in purchasing from suppliers;
  • A company registered in a free trade zone in China is also eligible to get a tax rebate on portion of taxed income.

China Special Economic Zones summary table

China Free Trade ZonesShanghai FTZFujian FTZGuangdong FTZTianjin FTZ
Summary
Area covered by the free zone?120 sq. km118 sq. km116 sq. km120 sq. km
Most popular business sector in the zone?Finance servicesFinance and aviationFinancial and manufacturingLarge scale manufacturing
Our Clients can setup a WOFE in the zone?YesYesYesYes
Negative Investment list introduced by the government?YesYesYesYes
Bonded warehouses available?YesYesYesYes
Can hire foreign workers?YesYesYesYes
Can secure offshore corporate finance?YesYesYesYes
Can a FTZ company freely remit money abroad?YesYesYesYes
Can easily invest in mainland China through FTZ?NoNoNoNo
Can trade with other parts of China?YesYesYesYes
Time zone? (ahead of GMT)+8 hours+8 hours+8 hours+8 hours
Is there an airport nearby?YesYesYesYes
Company registration
Can the company be incorporated online?NoNoNoNo
Can register LLPs to provide professional services?YesYesYesYes
How long to setup the company?4 weeks3 weeks4 weeks4 weeks
How long to secure the business license?4 weeks3 weeks3 weeks3 weeks
Foreign investor approval required?YesYesYesYes
Client must travel to China for company registration?NoNoNoNo
Minimum statutory share capital requirement?No (for most businesses)No (for most businesses)No (for most businesses)No (for most businesses)
Logistics considerations
Physical office space required for new companies?YesYesYesYes
Quality of utilities?GoodGoodSatisfactorySatisfactory
Average annual industrial space rental per sq. m.?US$80US$43US$34US$40
Average annual warehouse space rental per sq. m.?US$84US$27US$22US$30
Attractive for setting up a manufacturing business?NoYes (advanced manufacturing)Yes (advanced manufacturing)Yes (high end manufacturing)
Quality of Wi-Fi?GoodSatisfactoryGoodSatisfactory
Average monthly electricity prices? (per Kwh)US$0.034US$0.06US$0.05US$0.04
Proximity of sea port in kilometres?25 km22 km27 km55km
Proximity of airport in kilometres?33 km28 km32 km24 km
Proximity of rail in kilometres?17 km15 km18 km22km
Accounting and tax considerations
Corporate tax rate (%)?25%25%25%25%
Goods subject to custom duties within the zone?NoNoNoNo
VAT imposed on transactions within the zone?NoNoNoNo
VAT imposed on goods sold in the mainland?YesYesYesYes
Tax incentives for manufacturing start-ups?YesYesYesYes
Quarterly tax filing required?YesYesYesYes
Annual tax returns to be submitted?YesYesYesYes
Annual government inspection required?YesYesYesYes
Annual audit required?YesYesYesYes
Access to double taxation avoidance agreements?YesYesYesYes
Corporate banking and financial considerations
Recommended bank for corporate banking?HSBCStandard CharteredCitibankHSBC
How long to setup the bank account?4 weeks4 weeks4 weeks4 weeks
Corporate visa debit cards available?YesYesYesYes
Quality of e-banking platform?GoodGoodSatisfactoryGood
English e-banking platform available?YesYesYesYes
Can companies make overseas payments in RMB/USD?YesYesYesYes
Can companies secure loans within the zone?YesYesYesYes
Can secures loans from mainland China banks?NoNoNoNo
Access to Private Equity/VC funds from mainland China?NoNoNoNo
Can the company list on the local stock exchange?YesYesYesYes
Can the company list on Hong Kong stock exchange?NoNoNoNo
Labour considerations
Can hire foreign employees?YesYesYesYes
How long to secure the work permit?4 weeks6 weeks5 weeks4 weeks
Client must travel before securing a work permit?YesYesYesYes
Can investors secure a permanent residency?YesYesYesYes
Average monthly salary for local employees?US$1,250US$850US$746US$913

Contact us

For additional information on our free zone company registration services in China, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi