Foreign Invested Commercial Enterprise (FICE)

A WFOE with Import and Export Rights is called a FICE (Foreign Invested Commercial Enterprise).
Previously a trading WFOE had to be established inside a Free Trade Zone and had to use an Import and Export agent, whereas now a trading WFOE has the capabilities of distributing on its own. At the same time a manufacturing WFOE could only distribute the products it was manufacturing, but now it is able to buy and sell products not associated with the production.

The Company Law for the minimum registered capital has been put on a unified level for all types of business to RMB 30,000 (approx. USD 3,750).

Although local governments and regulations may indeed specify a “minimum amount” – the actual amount of registered capital to be injected into the business should be catered for on the basis of this being its initial operational capital needs – the amount of money required to sustain operational cash flow until the business can support itself in China. Attention to detail should be taken when drafting cash flow projections to break even – as the shortfall in operational costs is the amount that may be injected as registered capital.

At the same time if one is planning on selling goods into China, then the issuance of VAT invoices is required and a minimum of USD 140,000 has been set by the tax bureau.
Often, the local governments and tax officials will recommend a minimum of USD 200,000 to USD 250,000 in order to obtain approval.

The application procedure takes approximately 4-6 months (approximately 3 months to obtain the Business License) until the company is established. Naturally if there are problems along the way with the application documents, this can lengthen the procedure.

A FICE gives you the freedom to register your office address anywhere you like. Of course different districts, zones offer different tax incentives and preferential treatments to foreign enterprises. For example, Pudong District, Shanghai is 15% and in Puxi District, Shanghai it is 33%. In all of Shenzhen the tax rate is 15%, Ningbo is similar to Shanghai.

It is important to know, however, that starting from 1st January 2008 a unified profits tax rate will be implemented. A rate of 25% will be used for both foreign and domestic firms.

A FICE does not require an Import/Export agent