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Company Formation China



Shanghai Free Trade Zone

Updated on Tuesday 20th October 2020

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Shanghai Free Trade Zone.jpgSFTZ or Shanghai Free Trade Zone is the first special economic zone established in mainland China in 2013, and one of the most significant. With approximately 121 square kilometers, Shanghai FTZ provides a series of business opportunities and also advantages for foreign investors wanting to develop their operations in this special and highly-developed zone in China. A WFOE in China is the proper business structure for international players in China, but for more information about the company registration in China, we kindly invite you to talk to our specialists in company formation in China.

Short facts about Shanghai FTZ

Waigaoqiao Free Trade Logistic Park, Yangshan Free Trade Port Area, Waigaoqiao FTZ and Pudong airport Comprehensive FTZ are the four bonded zones in Shanghai FTZ, completed by newly added areas like Zhangjiang Hi-Tech Park, Shanghai Jinqiao Economic and Technological Development zone and Lujiazui Financial and Trade Zone. Foreign investors looking for business in Shanghai FTZ can benefit from varied advantages like no minimum share capital for opening a limited liability company in China or for establishing joint-stock companies. Moreover, the shareholders of a company in Shanghai FTZ can establish at their own discretion the financial contribution in the firm.

Advantages of Shanghai Free Trade Zone

Being the first special economic zone in China, the authorities took the privilege of establishing a wide range of excellent business policies and measures. Foreign investors can benefit from numerous advantages, like:
  1. Shanghai has a one-stop application processing platform for those wanting to open a business here.
  2. The Industry and Commerce Authority in China issues the relevant approvals for businesses in Shanghai.
  3. The same authorities simplified the procedure for acquiring the needed licenses and permits in Shanghai.
  4. The foreign exchange is permitted in Shanghai and it is supervised by the State Administration of Foreign Exchange.
Companies established in Shanghai FTZ can operate under the local currency or can exchange into foreign currencies without any restrictions in this matter and with tax-free benefits for at least 10 years. If you would like to start a business in China and especially in Shanghai FTZ, we kindly invite you to address your inquiries to our company formation agents in China.

Preferential business climate for investors from abroad

Shanghai FTZ is the first special economic zone in China and the one that provides a series of benefits for international investors. For instance, foreigners can establish any kind of activities without any restrictions. Medical services, international shipment & ocean freight, banking, telecommunications, e-commerce, trading and many more. However, it is good to know that sectors like education, social industries, health, public facilities management, sports and entertainment, real estate and finance might be subject to specific regulations. Let our team of experts in China help you in company registration in China and provide the needed assistance with the entitled authorities. 

Special business sectors in Shanghai FTZ

Transportation, warehousing, and logistics are well-developed sectors that host a multitude of international companies. The import and export sector is controlled by the authorities in Waigaoqiao Port, Pudong International Airport and Yangshan Deepwater Port. Companies wanting to activate in the insurance field are welcomed in Shanghai FTZ. It is good to know that Shanghai Institute of Marine Insurance is the authority that approves such companies in this important free trade zone. Foreign entrepreneurs might be interested in the healthcare sector where they are allowed to open WFOEs or cooperative joint ventures. Among the conditions imposed, we mention that a total investment of at least CNY 20 million is needed. In matters of telecommunication, the restrictions are well-known in China, and are also applicable to special economic zones, considering the state-owned companies activating in this sector. However, foreign investors can develop non-core telecom services which are different from basic messaging and voice calls. It is extremely important to know from the beginning what the business restrictions are in the country you wish to activate, in this case, China. Do not hesitate to solicit complete information about Shanghai FTZ and the sectors in which you can develop your business.

Conditions for business in Shanghai Free Trade Zone

Besides the current benefit regarding the company registration in SFTZ that says there is no need for a minimum share capital to operate in this zone, international entrepreneurs do not need to contribute with a 15% capital at the time a foreign-invested enterprise (FIE) is incorporated. This regulation was replaced with the possibility of contributing with an amount at their own discretion. Even so, the stockholders are still responsible for the accuracy and validity of capital payments in the company established in SFTZ. It means that such contribution needs to be considered in the company’s accounting aspects, in compliance with the subscribed shares or capital. Here are other aspects to consider for opening a company in Shanghai Free Trade Zone:
  • The authorities allow company owners to use a wide range of currencies.
  • A 10-year tax-free period is offered to international business owners in SFTZ.
  • Certain type of transactions requires the use of the local currency.
If you would like to know more about how you can register a company in Shanghai Free Trade Zone, please discuss with one of our company formation agents in China.

The one-stop applications and advantages involved

The one-stop application process allows the registration of companies in SFTZ in a simple and fast manner. If there are specific approvals or licenses to obtain, the registration will prolong for a while. This is normally the case of import and export companies for which a license is needed, being issued in a couple of weeks. There is no need for minimum share capital, so, the registration is made quite rapidly, also helped by a specialist in company formation in China. The one-stop application for companies in SFTZ comes with varied advantages, like the annual inspection system that has been replaced with the annual reporting. Moreover, if you consider it is best to buy virtual office packages in SFTZ, you may do so without restrictions.

Financial advantages in SFTZ

Business owners in SFTZ have different financial advantages, not only obligations. Besides the fact that there is no need for a minimum share capital at the time of registration, the transfer of funds outside China is free of charge. Another regulation regards the offshore loans and the possibility of using the FTAs (Free Trade Accounts) to apply for offshore loans from outside mainland China, up to twice the capital of the enterprise. Overseas RMB loans are also permitted in STFZ.

Taxes in SFTZ

Even though the authorities allow a 10-year tax exemption in the Shanghai Free Trade Zone, there are other tax facts to consider:
  • The consumption tax and the import-level VAT is imposed on companies producing varied goods in SFTZ, for sale purposes in mainland China.
  • Machinery and equipment are exempt from customs duties and import-level VAT.
  • Finance leasing enterprises can refund the export taxes.
If you would like to know more about the taxation in the Shanghai Free Trade Zone, it is recommended to talk to a specialist. Our company formation agents in China can assist in this field.

Other interesting facts about SFTZ

There is no need for formal custom declarations for overseas shipments. The authorities can accept a shipping bill only, in SFTZ. Retailers with online activities can store their products, in SFTZ special areas, with minimal and affordable costs. In order to avoid agency fees, the Direct Imported Goods Market can be a great option for international suppliers with activities in SFTZ. Shenlan Bonded Exhibition Centre is dedicated to alcoholic beverage producers and retailers operating in Shanghai Free Trade Zone. Transportation and logistics, medical institutions, plus the financial services are on debate for a series of important liberalization policies that will soon be implemented in SFTZ. These important changes are meant to attract more international investors to Shanghai Free Trade Zone and to smooth the business operations as much as possible. You can discuss with our team of company formation representatives in China and find out all the details concerning the business registration in SFTZ and about the new policies. Here are some interesting facts and figures about China:
  1. China ranks 31st out of 190 economies in the world, according to the 2020 Doing Business report.
  2. USD 1,769 billion was the approximate total FDI stock for China in 2019.
  3. China is the second-largest foreign direct investment recipient after USA.
  4. Around USD 61 billion was the value of greenfield investments in China in 2019.
Please feel free to contact our team of company formation representatives in China at any time and ask for comprehensive support and information.

Meet us in China

Call us now at +86-755-82148419 to set up an appointment with our company formation specialists in China. Alternatively you can incorporate your company without traveling to China.

As a Tannet Group Limited client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in China. 

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