China free zones in 2022

Healy Consultants assist our foreign Client looking to establish their business in China’s Free Trade Zones (FTZs), the special economic zones. The Chinese Government established its first free trade zone in Shanghai in 2013, and has since then set up other free trade zones including i) Tianjin FTZ, ii) Fujian FTZ and iii) Guangdong FTZ. Please find an overview of these free zones below:
Register a free zone company in China

  1. Shanghai free trade zone
    • Established in 2013, this free trade zone was the first of its kind to be set up in mainland China, covering over 120 square kilometers;
    • The zone offers logistics services including vast space for warehousing facilities, procurement and distribution and supply chain management;
    • The zone incorporates four other sectors-specific areas namely i) FTZ bonded area, ii) Lujiazui financial district, iii) Jinqiao export processing zone and iv) Zhangjiang high tech park.
  2. Fujian free trade zone
    • Established in December 2014, Fujian free trade zone cover at least 118 square kilometers and include i) Xiamen area ii) Fuzhou area and iii) Pingtan areas;
    • The zone focuses on i) advanced manufacturing, ii) international shipping, iii) tourism, iv) building a 21st century maritime silk road and v) financial innovation cooperation;
    • The free trade zone aims to build a trading environment that will open-up china to the rest of the world by focusing on cross-strait economic cooperation.
  3. Guangdong free trade zone
    • Located in the coastal province of Guangdong, the zone will seek to further integrate mainland china with Macau and Hong Kong;
    • The zone focuses mainly on the financial industry, customs clearance and opening up maritime trade routes to Europe and Africa;
    • The zone aims to develop i) an internationally linked financial zone, ii) manufacture-based service industry in Quinhai and Shekou districts and iii) global shipping and supply chain hub.
  4. Tianjin free trade zone
    • Established in the municipality of Tianjin, the free trade zone covers an area of approximately 119 square kilometers and aims to boost Tianjin in the China-Mongolia-Russia economic corridor;
    • The free zone’s main activities include i) high-end manufacturing, ii) R&D and technology transfer, iii) financial leasing and iv) international shipping and logistics;
    • The zone aims to develop a high-level platform for development of the Beijing-Tianjin-Hebei region and opening up the region for institutional innovation throughout China.

Benefits of China free trade zones

  1. Our Clients registering their trading companies in the free trade zones will benefit from:
    • Eligibility for tax rebate on a portion of the company’s taxed income;
    • Exemption from customs duties and import taxes for goods transferring between the free zone and overseas destinations;
    • Optimized and straightforward customs clearance procedures for goods that need to transfer to waterways, airways and railroads;
    • Exemption from corporate tax for companies engaged in international shipping, transporting, warehouse, and international shipping insurance.
  2. Other benefits of establishing in a China free trade zone include
    • Absence of foreign exchange controls for companies registered within the free trade zones;
    • Favorable interest rates in financial market and cross-border use of Chinese RMB;
    • Companies registered at Yangshan Free Trade Port Area can open offshore accounts to provide convenient financial settlement for overseas business;
    • FTZ companies are also permitted to make collective customs declaration of imported goods.

China Special Economic Zones summary table

China Free Trade Zones Shanghai FTZ Guangdong FTZ Fujian FTZ Tianjin FTZ
Summary
Free Zone Locations Shanghai Shenzhen, Guangzhou, Zhuhai Fuzhou, Xiamen, Pingtan Tianjin
Area covered by the free zone? 120 sq. km 116 sq. km 118 sq. km 120 sq. km
Most popular business sector in the zone? Finance services Financial and manufacturing Finance and aviation Large scale manufacturing
Our Clients can setup a WFOE in the zone? Yes Yes Yes Yes
Negative Investment list introduced by the government? Yes Yes Yes Yes
Bonded warehouses available? Yes Yes Yes Yes
Can hire foreign workers? Yes Yes Yes Yes
Can secure offshore corporate finance? Yes Yes Yes Yes
Can a FTZ company freely remit money abroad? Yes Yes Yes Yes
Can easily invest in mainland China through FTZ? No No No No
Can trade with other parts of China? Yes Yes Yes Yes
Time zone? (ahead of GMT) +8 hours +8 hours +8 hours +8 hours
Is there an airport nearby? Yes Yes Yes Yes
Company registration
Can the company be incorporated online? No No No No
Can register LLPs to provide professional services? Yes Yes Yes Yes
How long to setup the company? 4 weeks 4 weeks 4 weeks 4 weeks
How long to secure the business license? 4 weeks 4 weeks 4 weeks 4 weeks
Foreign investor approval required? Yes Yes Yes Yes
Client must travel to China for company registration? No No No No
Minimum statutory share capital requirement? No (for most businesses) US$730,000 No (for most businesses) No (for most businesses)
Logistics considerations
Physical office space required for new companies? Yes Yes Yes Yes
Quality of utilities? Good Satisfactory Good Satisfactory
Average annual industrial space rental per sq. m.? US$80 US$34 US$43 US$40
Average annual warehouse space rental per sq. m.? US$84 US$22 US$27 US$30
Attractive for setting up a manufacturing business? No Yes (advanced manufacturing) Yes (advanced manufacturing) Yes (high end manufacturing)
Quality of Wi-Fi? Good Good Satisfactory Satisfactory
Average monthly electricity prices? (per Kwh) US$0.034 US$0.05 US$0.06 US$0.04
Proximity of sea port in kilometres? 25 km 27 km 22 km 55km
Proximity of airport in kilometres? 33 km 32 km 28 km 24 km
Proximity of rail in kilometres? 17 km 18 km 15 km 22km
Accounting and tax considerations
Corporate tax rate (%)? 25% 25% 25% 25%
Goods subject to custom duties within the zone? No No No No
VAT imposed on transactions within the zone? No No No No
VAT imposed on goods sold in the mainland? Yes Yes Yes Yes
Tax incentives for manufacturing start-ups? Yes Yes Yes Yes
Quarterly tax filing required? Yes Yes Yes Yes
Annual tax returns to be submitted? Yes Yes Yes Yes
Annual government inspection required? Yes Yes Yes Yes
Annual audit required? Yes Yes Yes Yes
Access to double taxation avoidance agreements? Yes Yes Yes Yes
Corporate banking and financial considerations
Recommended bank for corporate banking? HSBC Citibank Standard Chartered HSBC
How long to setup the bank account? 6 weeks 6 weeks 6 weeks 6 weeks
Corporate visa debit cards available? Yes Yes Yes Yes
Quality of e-banking platform? Good Satisfactory Good Good
English e-banking platform available? Yes Yes Yes Yes
Can companies make overseas payments in RMB/USD? Yes Yes Yes Yes
Can companies secure loans within the zone? Yes Yes Yes Yes
Can secures loans from mainland China banks? No No No No
Access to Private Equity/VC funds from mainland China? No No No No
Can the company list on the local stock exchange? Yes Yes Yes Yes
Can the company list on Hong Kong stock exchange? No No No No
Labour considerations
Can hire foreign employees? Yes Yes Yes Yes
How long to secure the work permit? 3 months 3 months 3 months 3 months
Client must travel before securing a work permit? Yes Yes Yes Yes
Can investors secure a permanent residency? Yes Yes Yes Yes
Average monthly salary for local employees? US$1,250 US$950 US$850 US$913

Contact us

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