Brief Introduction To Business Environment In Chongqing,Company Registration Set Up Business In Chongqing China

General Background

Chongqing has a total area of 82,400 sq km. Total population stood at 30.48 million by the end of 2016. Chongqing’s GDP grew by 10% in the first three quarters of 2017, three percentage points higher than the national average.

Chongqing is one of China’s four municipalities directly under the central government, but its structure is substantially different from the other three. For instance, the area of Chongqing is 13 times that of Shanghai, and its population is 6.3 million more than Shanghai’s. The vast majority of Chongqing area is still rural. In 2016, Chongqing’s urban population only accounted for 62.6% of its total population.

The establishment of the Chongqing municipality in 1997 represented a major breakthrough of China’s initiatives to speed up economic development in the central and western regions. The Three Gorges Project which has positive implications in areas such as tourism, relocation of residents and environment protection has stimulated development of Chongqing’s economy, as well as the western region as a whole.

  

“One Belt, One Road”: Chongqing as Western Hub of Yangtze River Economic Belt

The Chongqing municipal government issued its Opinions on Implementing the National Strategy of “One Belt, One Road” and Building the Yangtze River Economic Belt in December 2014. In order to enhance its connectivity and influence under the “Belt and Road” and Yangtze River Economic Belt initiatives, Chongqing will further reinforce its strategic position as a shipping centre in the middle reaches of the Yangtze and a national logistics hub. Efforts will also be focused on developing the city into a financial centre and technology education centre. It is reported that the city will invest up to Rmb1.2 trillion in infrastructure construction by 2020.

  

Industries

Chongqing is one of the old industrial bases of China. It is a major automobiles, military, iron & steel and aluminum industry centre in China. Chongqing’s industry is dominated by heavy industry. In 2016, heavy industry accounted for 74.3% of the municipality’s gross industrial output. In recent years, Chongqing’s electronics and related industries grew strongly. The share of gross output of telecommunication equipment, computers and other electronic equipment industries in total gross industrial output grew from 11.4% in 2012 to 16.8% in 2016.

Composition of GDP (%)

	2000	2016
Primary	17.8	7.4
Secondary	38.9	44.2
Industry	31.9	34.4
Tertiary	43.3	48.4

Source: Chongqing Statistical Yearbook 2017

Output Share of Leading Industry Groups (2016)

Sector	% share industrial output
Motor vehicles	22.3
Communication and electronic equipment	16.8
Railway, ship and other transport equipment	6.6
Electrical machinery and equipment	5.0
Processing of food from agricultural products	4.6
Raw chemical materials and chemical products	4.0

Source: Chongqing Statistical Yearbook 2017

High-tech Development

Chongqing New North Zone (CNNZ) is a modern industrial base aimed at developing hi-tech industries. The zone consists of several zones including the Chongqing Economic and Technological Development Zone, Chongqing High-Tech Industrial Development Zone and Chongqing Export Processing Zone.

Leading computer and related products manufacturers have set up plants in Chongqing, including Foxconn and Inventec from Taiwan. In 2016, exports of high-tech products accounted for 62% of total exports. Exports of notebook computers accounted for about 39% of Chongqing’s total exports.

Tourism

There are some famous tourist spots in Chongqing, e.g. the Three Gorges, Dazu Rock Carvings. In 2016, Chongqing received 3.17 million overseas tourists (+12.1%), bringing foreign exchange revenue of US$1.69 billion (+14.9%).

Foreign Trade

The leading export market was the US in 2016 which accounted for 24% of Chongqing’s total exports. Other major export markets included Germany (9.8%), Hong Kong (9.7%) and South Korea (4.1%). Major sources of imports included Taiwan (accounted for 15.5% of total imports), South Korea (11.9%) and Malaysia (10.9%). In 2016, Hong Kong’s trade with Chongqing dropped by 6.3% year-on-year to top US$4 billion.

In 2016, the total utilised FDI of Chongqing was US$2.6 billion, dropped by 30.4% year-on-year. Hong Kong was the largest source of FDI in Chongqing, while other major investors came from Singapore and South Korea. In 2016, investment from other provinces grew by 9.6% to Rmb935 billion.

An increasing number of multinational companies have set up operations in Chongqing. By the end of 2016, 272 of the world top 500 companies have set up operations in Chongqing. More and more foreign companies relating to the electronic industries are setting up in Chongqing. Besides Hewlett-Packard, Foxconn and Inventec, Acer from Taiwan has also set up a manufacturing base in Chongqing. Honeywell is also building an automobile material plant.

Consumer Market

Chongqing has a large local market with a total population of over 30.48 million. In terms of per capita disposable income of urban residents, Chongqing reached Rmb29,610 in 2016, up 8.7%.

Chongqing is a retail and wholesale centre of southwestern China. The retail industry of Chongqing is very competitive, particularly with the establishment of a number of local and foreign retail enterprises such as Carrefour, Walmart, Metroand Gome. Major department stores and shopping malls include Chongqing Department Store, New Century, Wangfujing, Pacific, Times Square and Metropolitan Oriental Plaza.

There are several major shopping districts in Chongqing, namely Jiefangbei (解放碑), Shapingba (沙坪壩), Nan Ping (南坪), Guanyinqiao (觀音橋) and Yangjiaping (楊家坪). Chaotianmen market (朝天門) is a major wholesale centre in southwestern China selling a wide range of products such as garment, plastic products and textiles.

 

To facilitate people who want to invest and set up business in Chongqing , here is an introduction of Types of business presence in China: 

Before starting up a business in China, you have to know what are the options. Foreign Investors generally establish a business presence in China in one of five modes: Wholly Foreign Owned Enterprise (WFOE); Representative Office; Foreign Invested Partnership Enterprises (FIPE); Joint Venture and Hong Kong Holding Company.

Wholly Foreign Owned Enterprise (WFOE) is a Limited liability company wholly owned by the foreign investor. WFOE requires no registered capital and it's liability of equity , can generate income, pay tax in China and it's profit could be repatriate back to investor's home country. Any enterprise in China which is 100 percent owned by a foreign company or companies can be called as WFOE.

RepresentativeOffice (RO) is a Liaison Office of it's parent company. It requires no registered capital. It's activities would be: product or service promotion, market research of it's parent company's business, Quality Control liaison office etc in China. RO generally is prohibited to generate any revenue nor generating contracts with local businesses in China.

Joint Venture (JV) is a Limited liabilitycompany formed between Chinese investor andForeign investor. The parties agree to create a entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise. JV usually been used by foreign investor to engage the so called restricted in areas such like: Education, Mining, Hospital etc.

Since March 1, 2010: Measures of Establishment of Foreign Invested PartnershipEnterprises (FIPE) in China istaking 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, Guangzhou, Shenzhen, Hangzhou and rest cities of China

Hong Kong Company usually been used as a Special Purpose vehicle (SPV) to invest Mainland China. Hong Kong is one of the quickest locations to Incorporate a business. Although a HK company is not a legal entity in Mainland China (Mainland China and Hong Kong, See Wiki 1 country, 2 systems), lots foreign investors, especially investors from Europe and North America still chose to setting up a Hong Kong company as SPV to invest China.

After China's entry to WTO, most industries in China welcome foreign investment, WFOE setting up in China becomes the first option of foreign investment's entity structures instead of Rep. Office setting up in China. At the mean time, for tax purpose, effective licensing system etc more and more investors use Hong Kong as the holding company to invest China mainland, using this offshore company to hold their operations in China.

Business set-up in Chongqing is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls . Tommy China Business Consulting has direct connections in the local government

Since 2006, TCBC has been focusing on consulting services for our clients to invest in Chongqing China. We are specialized in establishment of wholly foreign owned enterprises (WFOEs), setting up of offshore companies, trading services, tax minimization, Assist in obtaining government approvals and certificates for running business, negotiate and draft various legal documents provide legal advice, negotiate government officer for Land acquisition. Advising on formation of WOFE and business structures, managing and controlling WOFE in Chongqing China, drafting privacy policies and structuring commercial transactions

TCBC will manage all aspects of incorporation to get you a business license in Chongqing  China. We offer a range of company formation services including helping you to set up:

-Wholly Foreign Owned Enterprises (WFOE )

-RepresentativeOffices

-Joint Ventures (Equity/Co-operative)

-Foreign Invested Partnership Enterprises (FIPE)

-HongKong Holding Company.

Contact Tom Lee for company registration in Chongqing now