Besides restriction on industries (encouraged, restricted or prohibited categories), China government also has strictly regulation on the ratio of investment amount to registered capital. Under Company Act, the minimum registered capital for enterprises with foreign investment is 500,000RMB (73,000 USD), yet various in areas. If foreign enterprises are involved in industries of software/ maintenance/ services, the minimum registered capital could be used for enterprises set up; manufacturing enterprises, for considering production capacity, should be with higher registered capital. Registered capital should be audited by legal institution (accounting firm). The Reps. Offices of foreign companies in China don’t need paid-up capital. If enterprises want to increase investment amount, the ratio of increased capital to increased gross investment should coordinate with regulations.
Registered capital is usually formed by “current capital” and “machinery capital”. Most local governments regulate that ratio of machinery to current capital is 7 to 6 or 6 to 4. Too much current capital will affect the enterprises' capital turnover, and if remitted to Mainland China, it would be difficult to return the capital to your parent country. Less current capital will cause you unable to make ends meet. Therefore, a sound arrangement for the capital structure is necessary. The paid-up capital is not required to be fulfilled at a time, but 15% should be paid within 3 months when you get the business license, and the rest could be paid in 1 to 3 years.
GZ
SZ
HK
ST
ZH
SH
ZJG
DL
NB
XM
FZ
TJ
QD
Registered Capital
21
7.3
7.3
7.3
13.5
7.3
21
7.3
7.3
21
10
7.3
21
Paid up Time(year)
1
1
2
1
1
1
1
2
1
1
0.5
2
1
Manufacturing
Enterprise
Business
Co.
Branch/
Rep. Office
Invest
Amount
Reg.Capital
Ratio
of M.to Capital
Duration
Reg.Capital
(Wholesalel)
Reg.Capital
(Retai)
Duration
SZ
19
13
6/4
1
13
4
1
No restriction
on the
minimum
registered
capital, no
limitation on
the ratio of
equipment to capital.
DG
100
100
7/3
1.5
65
65
2
GZ
10
10
6/4
1
13
13
1
ZS
7.3
7.3
6/4
1
13
4
1
HZ
7.3
7.3
7/3
2
7.3
4
2
ZH
7.3
7.3
7/3
1
7.3
4
1
XM
7.3
7.3
6/4
2
7.3
4
2
FZ
10
10
7/3
1
10
10
1
NB
13
10
7/3
2
7.3
4
2
HZ
7.3
7.3
No
1
7.3
4
1
SH
21
14.5
7/3
1
14
14
1
KS
7.3
7.3
7/3
2
21
21
2
NJ
20
20
7/3
1
7.3
4
1
SZu
10
7.3
7/3
3
26
26
2
CD
7.3
7.3
6/4
3
7.3
4
2
CQ
7.3
7.3
7/3
2
7.3
4
2
WH
7.3
7.3
7/3
2
7.3
4
2
QD
7.3
7.3
7/3
3
7.3
4
2
TJ
7.3
7.3
No
0.5
7.3
4
1
BJ
10
7.3
No
1
7.3
4
1
DL
7.3
7.3
7/3
2
7.3
4
2
SY
7.3
7.3
7/3
2
7.3
4
2
◎
Form of capital contribution: Foreign investors can utilize capital, real object, industrial property rights and non-proprietary technology and ownership of the land as well as foreign exchange to invest. Approved by authority, RMB gained of other enterprises in China can also be used. The total capital is no less than 30% of registered capital when using real object.
◎
Time of capital contribution: Foreign investors can pay money by installment. See the paid-up time in chare above. Companies or factories established in China can set up branches as soon as registered capital has been totally paid-up (Agency has been cancelled since May 2006, the expiration Office has to change into branch to operate). The Reps. Offices of foreign companies in China don’t need paid-up capital (branches set up by foreign companies are called Reps. Office, branches set up by sub-branches are called Agency), paid-up time should be written in application and M&A when establishing enterprises with foreign investment.
◎
Limitations on the priced equipments for contributing investment: When using the price of equipment to invest, equipments have to the necessary ones for enterprises production, and the price of which should be higher than that of same types at that time. The priced equipments should be written in a detailed inventory (name, type, quantity, price etc.), which shall be prepared and submitted to the industrial and commercial bureau. While the priced equipments delivered at China port, it is obliged to report to Commodity Inspection Bureau and sign the certificate of inspection. If type, quality and quantity of priced equipments don’t match with list submitted to the examining and approving organ by foreign investors, it has to be amended in a deadline.
◎
Limitations on the priced industrial property rights and proprietary technology for contributing investment: Foreign investors should own the industrial property rights and proprietary technology when using priced capital for contributing investment. The principle to price industrial property rights and proprietary technology should be conformity with international usage- the priced capital has not to exceed 20% of registered capital. With respect to those industrial property rights and proprietary technology, being assigned a fixed price for contributing investment, a detailed inventory of relevant data, including a duplicate of the proprietary rights certificate, the effective condition, technological performance, the practical value, the basis and standard for the calculation of pricing, shall be prepared and submitted to the examining and approving organ as an appendix to the application for the establishment of the foreign-capital enterprise.
