Shanghai’s FTZ (Free Trade Zone) allows for foreign companies to set up in the area for less money and in a faster turn-around time than in other Asian markets.
Many companies are currently taking advantage of this option and expanding their business to incorporate the Shanghai area. Horizons assists you with registering your company in Shanghai.
Details about the Shanghai free trade zone
The Shanghai Free Trade Zone offers incentives to encourage more cross-border investment and trading. It has a unique custom supervision system dubbed “Domestic but Out of Customs.” The tariff-free area provides a testing area for investment, finance, trade, legal and administrative changes.
The Shanghai Free Trade Zone encompasses 120 square kilometers and is composed of seven bonded zones, which include various sectors such as finance, trade development, technological development, ports, economic development, and medical services. Current fields that are encouraged to invest in this area include:
- Automobile manufacture and design
- Beverage and liquor
- Biological medicine
- Commerce and trade service
- Export trading
- Financial services
- Medical apparatus
- Professional services
- Social services
These are just a few of the industries that are encouraged to expand to the Shanghai area.
Read: New Six Pilot Free Trade Zones Soon to Be Launched
Benefits of setting up your business in the Shanghai free trade zone
There are many benefits to setting up your business in the Shanghai Free Trade Zone. Like Hong Kong has done before, there are free trade opportunities and new innovations that encourage foreign investment.
There are no limits to the scope of the business. Foreign investors can establish Wholly Foreign-Owned Enterprises and operate these businesses without having to partner with Chinese companies or employees.
This option provides you with greater control over the operations of your business, as well as the ability to increase your revenue and profits. Foreign entities can open a limited company in the Shanghai Free Trade Zone with no real capital requirements, providing an important gateway into the Chinese market.
Some of the most notable benefits of opening a company in the Shanghai Free Trade Zone include:
- The minimum investment necessary – You can open a business in mainland China without having to invest in any real estate, minimizing your initial capital investment. This benefit allows you to enter a new market that may have been previously closed off to you.
- Faster setup – With the help of a PEO in China, you can launch your business in a matter of days.
- Easier entry – The Shanghai Free Trade Zone encourages foreign investment. You can benefit from incentives for your investment in the region.
- 100% ownership – With the ability to create your own WFOE, you do not have to bring in outside investors or give away part of your business.
- No restriction on money transfer – Relaxed administrative controls and the Renminbi convertibility encourage cross-border money transfers.
- Low-risk entry – With minimal capital investment and loosened regulatory control, you can open your business in a low-risk environment.
- VAT tax benefits – The Chinese good export VAT rate is 17%. However, the government offers a rebate to exporters in approximately one month when in the Shanghai Free Trade Zone.
- Other tax benefits – In addition to the VAT tax rebate, there are other tax benefits to operating in the Shanghai Free Trade Zone, including that you only pay tax when entering in China while you operate in the bonded area.
- Fewer restrictions – While foreign investment requirements in various industries and other regulatory requirements often keep foreign investors out, the Shanghai Free Trade Zone has fewer requirements and restrictions regarding industries that foreigners can invest in.
Setting up a business in Shanghai is easy
With the assistance of Horizons, you can set up a business in Shanghai easier than ever with these benefits:
- No physical office requirement
- No required minimum capital investment
- Company registration address provided
- Set up in a matter of days
Horizons can assist you with the process of setting up your business in the Shanghai Free Trade Zone.
We take care of all of the details of the registration process, including getting your company name approved, identifying the scope of your business and obtaining certificates of incorporation.
We complete all of the necessary legal formalities and procedures for you to confidently begin your Chinese launch.