FICE in China
Foreign-invested commercial enterprises (FICE) in China are capable of conducting the following activities:
- Import, export, distribution and retailing
- Retailing – selling goods and related services to individual persons from a fixed location, as well as through TV, telephone, mail order, internet, and vending machines
- Wholesaling – selling goods and related services to companies and customers from industry, trade or other organizations
- Representative transactions on the basis of provisions (agent, broker)
- Franchising
These activities can also be achieved through other means such as agents. A FICE will, however, bring the control needed to secure quality, service level and bring you closer to your suppliers as well as enable you to invoice your clients in Chinese currency.
There are limitations, however. A FICE cannot change the nature of the product but only sell what is has purchased. Additionally, certain products – such as books, periodicals, newspapers, automobiles, medicines, salt, agricultural chemicals, crude oil, and petroleum – face some ownership barriers. Namely, if a foreign investor in China has more than 30 retail stores that distribute the above products from different brands or suppliers, the foreign investor’s share in the retail enterprise is limited to 49 percent. Otherwise, for those that do not distribute the above goods, there are no limitations on ownership share or retail units. Foreign investors interested in international trade should also know that FICEs can now obtain their own import/ export license. Obtaining additional licenses for importing and exporting specific goods can become difficult though it is necessary in certain cases.
Establishing a FICE in China
The establishment process for a FICE in China is very similar to that of the WFOE. However, FICEs do not have to file an Environmental Protection Valuation Report as they do not manufacture or process. Also, FICEs are required to obtain a special Import-Export License Record with the Customs Bureau. As with the WFOE, special care also needs to be given to the articles of association, specifically the inclusion of a general manager article, a trade union article, and a supervisor article.
Registered capital
Minimum registered capital requirements have been reduced compared to a decade earlier. Secondly, the whole of China is now available for FICE establishment. The legal minimum for establishing these types of enterprises is RMB30,000 (if the PRC laws or regulations provide higher threshold than RMB30,000, then such higher threshold will need to be followed), but the presence of one shareholder usually causes an increase to around RMB100,000. Nonetheless, the market has now opened to some entrants who previously could not afford to get started in China. The concerns within the WFOE investment guide regarding working capital and registered capital’s relationship with total investment also hold true for the FICE.
For more information on the set-up process for a FICE, please reference the procedural workflow guides Establishment Workflows
