Last Updated: Jan. 3, 2017
[ NEWS! ] Since March 1, 2010: Measures of Establishment of Foreign Invested Partnership Enterprises (FIPE) in China is taking effect. The regulation, which take effect since March 1, 2010, are known as the Administrative Measures for the Establishment of Partnership Enterprise in China by Foreign Enterprises or Individuals. There's no required minimum registered capital for a Foreign Invested Partnership Enterprise (FIPE) in Shanghai, Beijing, Shenzhen, Hangzhou and rest cities of China. Information provided below will guide you to:
In Mainland China, there are 4 modes of business presences for foreign investors: WFOE(65%), Representative Office(20%-), FIPE(10%+), Joint Venture(5%). FIPE becomes more and more popular among young entrepreneurs with their new start ups in China as it requires no registered capital but the FIPE still could hire people, collect payments, issue invoices, apply for work & residence in China freely. It's not a surprise that most people you meet in China may not know anything about FIPE as it's relative new and government is not promoting on this.
As roughly comparison between these 4 modes, check the Comparison Chart.
We are among a very few companies capable of offering FIPE establishment in China.
In Shanghai: we helped our clients to establish the 2rd and 4th FIPE of Shanghai,
In Beijing: The 6th FIPE of Beijing
In Shenzhen: The 8th FIPE of Shenzhen
The Foreign Invested Partnership Enterprise (FIPE) is a unlimited liability business entity without minimum requirements on registered capital.
A partnership in the People's Republic of China is a business entity governed by the Partnership Enterprise Law passed by order of the President of the People's Republic of China to authorize and govern partnership enterprises. A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested.
Since June 1, 2007, Partnership Enterprise Law came into force and established partnerships as a legal business entity, Foreign Enterprises or Individuals establish Partnership Enterprise is not allowed only until March 1, 2010. Here's the Foreign Invested Partnership Enterprise Law
According to State Administration of Industry and Commerce (SAIC), From March 1, 2010- December 31, 2010, there were about 68 Foreign Invested Partnership Enterprise (FIPE) be established in China. The number of FIPE establishment in China is quite small for the first year, it is just because overseas investors are not familiar this type of business in China.
The term partnership enterprise refers to general partnerships and limited partnerships which may be established within China by individuals, legal persons and other organizations. A state-funded company, state-owned company, listed company, public welfare-oriented public institution or social organization may not become a general partner of a limited partnership
The Minimum number of partners should be 2, there's no requirements on the nationality of a Partner, thus it can be all foreign investors to form a FIPE or Foreign and Chinese partners mixed FIPE.
Following are different types of FIPE. Commonly,
The advantages of establishing a FIPE , compared with other types of enterprises, include, but not limited to:
A partner may contribute capital to the partnership to garner a share of the partnership's profits or losses. A capital contribution may include money, intellectual property right, land use right or other properties, or labor services at a valuation determined by agreement among the partners. If the partnership is a limited partnership, then the limited partners may not make capital contributions with labor services.
The default distribution scheme of profits or losses follows the proportion to capital contributions made by the partners. However, the distribution scheme may follow an informal negotiated agreement or abide by scheme adopted in the partnership agreement. If the proportions of capital contributions cannot be discerned, then the profits or losses will be distributed equally by the partners. The partnership agreement may not distribute all losses or all profits to just one or a group of partners within the partnership.
No corporate income tax required if partners are individuals. The individual partners shall pay their respective share of the partnership income. Corporate income tax applies if partners are companies.
China Government allows Foreign Invested Partner Enterprises (FIPE) remit their profits out of the country and such remittances do not require the prior approval of the State Administration of Foreign Exchange (SAFE). Dividends cannot be distributed and repatriated to oversea if the losses of previous years have not been covered while dividends not distributed in previous years may be distributed together with those of the current year. Repatriating the Registered Capital to home countries is forbidden during the term of business operation.
In China, terms of 15 to 30 years are typical for a FIPE. It is also possible to obtain extensions of the FIPE's duration.
A new rule on foreign employees’ social security in effect starting October 15, 2011. It is said that if a company hires a foreign employee, the company shall register this employee with the local social security authority within 30 days of the employee receiving their work permit.
More information about FIPE::
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