In establishing this kind of enterprises, usually foreigners provide all or most of funds, Chinese enterprises or individuals provide land, factory buildings, available device and facilities, some of which also provide some fund.

The Advantage of Sino – Foreign Co – Operative Enterprise
I. It facilitates the foreigners to manage and promote their business, for it’s largely – authorized independence;
II. The enterprise can develop its business in state without being bounded by the limits which are stipulated in Representative Office;
III. The enterprise can invoice in RMB, and benefits in RMB;
IV. The enterprise can exchange its RMB Profit into USD and remit it to its outbound parent company;
V. There is some tax preferential policies for foreign invest enterprises and the preferential policies are various according to different local areas and different industries;
VI.The both parties’ advantages and resources integration can benefit the participants.

The Preferential Policies Offered to Enterprises with Foreign Investment
The Chinese government levies low tax on enterprises with foreign investment, and preferential tax policies are offered to the sectors and regions where investment is encouraged by the state.
I. Income Tax
A. Rate of income tax: The income tax on enterprises with foreign investment is levied at the rate of 33 percent. The income tax on enterprises with foreign investment located in special economic zones, state new- and hi-tech industrial zones, or economic and technological development zones is levied at the rate of 15 percent. The income tax on production enterprises with foreign investment located in coastal economic open zones, special economic zones, or in the old urban district of cities where economic and technological development zones are located is levied at the rate of 24 percent. And the income tax on enterprises with foreign investment that are engaged in projects such as energy, communications, port and dock is levied at the reduced rate of 15 percent.
B. Tax reduction and exemption: The production enterprises with foreign investment that have an operation period exceeding 10 years shall, from the year they begin to make profit, be exempt from income tax for the first two years and allowed a 50 percent reduction for the following three years. Enterprises with foreign investment engaged in agriculture, forestry and animal husbandry, and enterprises with foreign investment established in remote and underdeveloped areas may, upon approval by the State Bureau of Taxation, be allowed a 15 to 30 percent reduction on the income tax for a period of another 10 years following the expiration of the period of tax exemption and reduction as provided for above. The income tax on enterprises with foreign investment located in mid-west China that are engaged in projects encouraged by the government shall be levied at a reduced rate of 15 percent for a period of another three years following the expiration of the Five-Year period of tax exemption and reduction. The enterprises with foreign investment that adopt advanced technology shall be exempt from income tax for the first two years and allowed a 50 percent reduction for the following six years. In addition to the two-year tax exemption and three-year tax reduction treatment, foreign-invested enterprises producing for export shall be allowed a reduced income tax rate of 50 percent as long as their annual export accounts for 70 percent or more of their sales volume. The foreign investor of an enterprise with foreign investment which reinvests its share of profit obtained from the enterprise in a project with an operation period of no less than 5 years shall, upon approval by the State Bureau of Taxation of an application filed by the investor, be refunded 40 percent of the income tax already paid on the reinvested amount.
II. Circulation-stage Tax:
Since January 1st, 1994, the Chinese government has levied unified value-added tax, consumption tax and business tax on enterprises with foreign investment and domestic enterprises. Technology transfer and technological development by foreign enterprises and enterprises with foreign investment are exempted from value-added tax, as a measure to expand domestic demand and to encourage technological renovation in foreign-invested enterprises. For foreign-invested enterprises engaged in projects in the encouraged or restricted-B categories, the value-added tax on China-made equipment purchased by the enterprises within their total amount of investment shall be fully refunded if the equipment is listed under the catalogue offered with income tariff exemption.
III. Import-stage Value-added Tax
A. Tariff rate: Since 1992 the Chinese government has reduced nine times the tariff rate for imported commodities. The present average tariff rate is 12 percent.
B. Tax exemption for imported equipment: Equipment imported for foreign-invested or domestic-invested projects that are encouraged and supported by the state shall enjoy tariff and import-stage value-added tax exemption.
Service Provided
We would like to be your guidance if you want to register a foreign – funded corporation. Besides helping you to process the whole procedure, the Chinese related policies and laws for setting up a foreign – funded enterprise and tax consulting services will be introduced and offered to you. The whole transaction process is about 2 months.