GoldenElms金榆 Digest #002: Company registered in Shanghai Free Trade Zone!
Company registered in Shanghai Free Trade Zone!
March 12th, 2018 – March 18th, 2018
We’re excited to announce our company has been registered in Shanghai’s Free Trade Zone!
It’s crucial to have a company to purchase inventory and issues VAT receipts for sales. Also, if you’re not a Chinese national, it can be difficult to open WeChat Official Accounts, Taobao, JD.com, Tmall stores etc. The best and easiest way is to have a company. Once the company is registered – we’re open for business!
After filing the paperwork it should take ~2-4 weeks depending and I’ll most likely need to go back to Shanghai for signatures once or twice.
Registering a company in China
Getting things done in China comes down to who you know. An IP lawyer friend of mine in Shanghai was incredibly gracious with this time and energy. He took an entire day to walk me through the process, start to finish, and introduce me to the right folks for the cheapest, fastest service.
I decided to register the company in Shanghai’s “Free Trade Zone”, which has a great reputation in China and a bunch of favorable policies for foreign-invested companies (i.e import/export, moving money in/out of the country, foreign companies can own a majority share in bank/insurance companies etc). Since so many foreign companies have set up shop here, there also is a robust service eco-system to make operations easier.
The government departments (think DMV) offer incredible service. You just need to show up with the right information and they will help you take care of the rest — assuming you can speak Chinese :).
However, to save time, it can make sense to hire an agent who can help you go to all the different departments for chops, signatures etc.
“LifeCow Horns” with our agent
Company Registration Information
I used my own name to register is much easier than using GoldenElms, LLC. In the future, we’ll most likely invest through GoldenElms but for to get rolling, I invested 100% of the capital.
When choosing a name, the structure is as follows: [City] + [Name] + [Type of Business] + [Limited.]
For our company, it will look something like Shanghai LifeCow Trading, Limited. The name needs to be submitted for review (we’re in that process right now), so you’ll submit at least 5 names while registering.
Registered capital basically means how much money you’re committing to investing in the WOFE over time. In the past there were strict requirements around your capital requirements, such as trading companies need a minimum $200k, manufacturing $500k etc. Also, you had to invest all the registered capital within 1 or 2 years .
Now you can take 30 years to invest the capital in China, and aren’t as strict regulations around the total registered capital. I went with $100k.
Scope of the business
For Chinese companies, you have to clearly define the “scope” of the business. If you sell diapers, you need to clearly write “child + maternity” products. In the past, operating outside of the scope on the business license opened you up to all sorts of risks. Or, registering too many wasn’t allowed either.
Fortunately, nowadays, it’s more open and you can be incredibly broad in your scope. We registered almost all categories imagine accept food & beverage (for the time being). All of this can be updated later but easier to do it right from the start. Our agent laughed when I said we want to be a cross-border Amazon :).
To register you need provide a physical office space, with a signed lease agreement. This can be costly early-on, especially in Shanghai.
We were fortunate enough that our agent can provide a “virtual office” for 3 years, which means we can operate without a physical location. Honestly, this is rare and you need to know the right people to use a virtual address.
Note: If you are going to sell food & beverage, you’ll need to have a physical office space.
If you have more questions about details, or who we used to get this done, feel to get in touch.
I had the opportunity to visit one of our factories and incredibly confident in their ability to grow the business with us. The owner, David, is a young guy who took over his Father’s company four years ago. He’s ambitious, trustworthy, and wants to grow. Perfect GoldenElms material :).
Raw material being sowed.
Automated fabric cutting machine from Italy
Next week we plan on visiting another factory, and start to pre-sell gDiapers to customers for when they are ready in a month or so.
We found our first brand ambassador of Suzi’s! She’s super excited to start introducing the product to friends.
If you have any comments or questions, never hesitate to reach out!