Author Archive The Incorp China Team

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E-chop—Pioneer for Paperless

“Please have the company chop on the paper we received from the government and then send the original ones to us ASAP.” Are you familiar with above words in emails to some degree?

In China, the Government requires companies to have a “corporate seal” called Chops. Similar to the signature from an authorized representative in western countries, these corporate chops are the way to register official transactions, submit documentation, and validate paperwork in China. The body is where you bring more details about the subject or the problem. There’s a huge amount of paperwork required from the Chinese government, so company chops are typically used. However, to meet Chinese sustainable developmental regulations, the relevant department encourages a paperless environment. To adapt to this demand, the e-chop option becomes the ideal application. E-chop is the digital version of its physical counterpart and can be used with the same effectiveness as a paper Chop. E-chop is created by electronic seal technology which takes the place of the traditional physical seal.

While some people still use the traditional seals, the use of this electronic version is growing, and the full implementation and use is a matter of time. For instance, two-thirds of tax bureaus in Guangdong Province have adopted the e-chop system. More than 2 million documents are processed each year and the administrative costs saved equal about 5 million in RMB with an additional 35% increase in the comprehensive office efficiency. There are a variety of chops for different uses. While for some the process can be overwhelming and time-consuming, Incorp China can navigate it for you, reducing unnecessary interaction with Government offices.

Incorp China has provided expertise and personalized service for the past 30 years. Let us grow your business.

10 steps to authenticate your U.S. documents to be used in China

This might be something you have not given a whole lot of thought in the past. However, Chinese authentication of US documents is required with almost every application process you will encounter on the road of opening your own China business entity. Registration of an entity in China requires documentation preparation in the US and China. We will help you with documentation preparation in both the US and China saving you time and money. Having your American documents authenticated by the Chinese Consulate means they have passed the official screening to be used in China.

Failing to prepare your foreign documents may result in the delay or refusal of your applications. Here’s a guide on how you can complete this initial process in ten steps:

1. Identify documents

At first, you will need to select the documents that need legalization and clarify who is the legal representative/applicant for the company.

2. Notarization

There are some instances in which the US documents need to be notarized. In this case, we have a specialized legal services providers network to help you in completing this step easily.

3. Fill out document authentication form

Your legal representative/applicant (as defined in step one) now has to fill out and sign the Chinese application for document authentication. Because forms may vary, depending on in which state you want to apply for US document authentication, visit the respective state’s Chinese consulate website to find the correct form.

For the New York China consulate, e.g. you can find the document here: http://newyork.china-consulate.org/chn/fwzc/cgbg/P020171201186551196801.pdf

(Leave section 1 and 7 blank. Have legal representative/applicant sign twice in section 8 (top and bottom). We fill out section 7 and sign as the agent in section 8.)

4. Compile supporting documents

The next step is to obtain a copy of the following supporting documents:

  • The legal representative’s/applicant’s passport
  • Company’s certificate of existence and good standing
  • Articles of incorporation

5. Submit the documents

Submit the documents that need to be legalized by the State Department or Secretary of State to be certified. Some states require to authenticate the documents through the county’s clerk office before submitting them to the State Department or Secretary of State, so be sure to check.

6. Keep a record

Once the documents are certified by the State Department (and possibly the county clerk’s office) make a photocopy of them for your own records as well as the next step.

7. Submit the docs to the Consulate

Go to the Chinese consulate or embassy and submit the originals as well as the photocopies of the certified documents along with the application for the authentication and supporting documents.

8. Get a receipt

The consulate will issue a receipt with the total owed and the pick-up date for your documents.

9. Collect your authenticated documents

Return on the pick-up date with the receipt, pay the amount owed and process to then collect your authenticated documents.

10. Verify that all the documents have been authenticated

Once you’ve completed all the steps above, verify that all your documents have been authenticated. In case we have completed this process for you, we would then ship the authenticated documents back to you, our client, or wherever you want them shipped.

 

If you have any questions or would like to get a free consultation from us, simply email info@incorpchina.com or call +1 (561) 729 6508.

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Continue with 7 Benefits of Opening Up a Company in Hong Kong:

 

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7 benefits from opening up a company in Hong Kong




Besides being a prestigious business address, Hong Kong has a variety of benefits to offer for those who are looking to or already own a company in China. Ranging from financial over legislative to cultural reasons. Below are your top 7 benefits from opening up a company in Hong Kong together with a WOFE in Mainland China.

 

  1. Tax benefits

While you are expecting to pay 25% income tax on your profits in China, with a Hong Kong company under your name you are able to send said funds across the border for a 5% transfer fee. This method can save you a considerable amount of money, especially considering that funds can be transferred between China and Hong Kong companies without currency controls. What that means is, when sending money from China abroad, usually, there are extremely high fees in place as well as a maximum amount of money that can leave the country per person or company per year.

Additionally, Hong Kong operates under a territorial tax regime. This means that there is a zero percent tax rate on money that is not earned in Hong Kong. Profits earned in Hong Kong are subject to a 16.5% tax. On the other hand, startups are eligible for VAT tax refunds. Either way, income tax in Hong Kong is significantly less than on the mainland. The exact tax break will always depend on the industry of your company as well as the location of your WOFE. In the QianHai zone in Shenzhen, for example, companies are given a particularly generous tax break.
To find out about this in more detail, contact Incorp China to get first-hand tax advise from local accounting and tax experts.

 

  1. Free economy and trade

Imports from abroad to Hong Kong are significantly easier to arrange and cheaper than transporting goods straight into Mainland China. Under CEPA, an agreement between Hong Kong and China with the aim to encourage trade, Hong Kong goods can even be imported into China under zero tariffs, as long as said goods and your company complies with CEPA rules. (http://www.hktdc.com/resources/MI/Article/cepa1/2009/06/274914/1244104141867_cepapdf.pdf) If you are planning on regularly moving cargo across Chinese borders, Incorp China would strongly advise talking to us about setting up an entity in Hong Kong.

 

  1. Intellectual property

Other than in Mainland China, Hong Kong takes into consideration the prior use of intellectual property when filing for trademarks, patents, copyrights, etc. China, on the other hand, operates under the first-to-file principle. If you are interested in finding out about the Chinese trademark system in more detail, please read more about it here.

 

  1. Familiar and regulated legal system

Whether tax law, intellectual property registration and enforcement, an open economy or the general bureaucratic processes, Hong Kong offers a much more Western mindset when it comes to legal systems and business culture. Familiar documents, consistent bureaucratic procedures and English speaking government officials can offer a smoother entrance into the Asian business world, not just for inexperienced businessmen. Bureaucratic processes can furthermore be executed more rapidly in Hong Kong than they would in China. For example, changing the structure of your company by reallocating shares would take about two months in China, whereas such an action would only require about a week in Hong Kong.

 

  1. Hong Kong as an international node

The proximity to the mainland and its open, capitalist mindset make Hong Kong the perfect connecting point between East and West. Strong economic ties with the ASEAN countries as well as a trustworthy environment for Western investors make Hong Kong a fertile ground for businesses from all around the world. The combined understanding of both the Western and Eastern business and cultural mentality will prove to be beneficial in more ways than you would expect.

 

  1. Relatively hassle-free setup

…especially if you are turning to Incorp China to help you out! We are offering a free initial consultation to help you figure out how to open up a company stress-free.

Hong Kong companies take less time to open in comparison to Chinese enterprises. More importantly, government institutions are considerably more straightforward and consistent regarding their requirements for opening an entity. In Mainland China, rules and regulations can change unexpectedly and abruptly, making it absolutely essential to have a team on the ground that is tirelessly checking up on your application and actively pushing it forward. On top of legislative changes, in China, it is common that institutions like banks or government bureaus will change their mind unexpectedly about a signature or document they require on top of what you were instructed to provide. Don’t let this discourage you as this is a commonly observed phenomenon, especially towards foreigners.

 

  1. Simplified China WOFE setup

Opening a Hong Kong entity makes applying for a Chinese WOFE significantly easier. Hong Kong incorporation documents are filed in English as well as Chinese which speeds up the process of incorporating a company on the Mainland.

 

  1. Limited liability

Setting up a limited liability company (LLC) in Hong Kong can protect you from lawsuits even in Mainland China. Since each shareholder of an LLC can only be held accountable for the capital they have invested and the Hong Kong company is liable for the registered capital in Mainland China, in case of a lawsuit, your personal capital outside of your business would be protected.

 

 

No doubt, a Hong Kong company can be highly beneficial to those planning to open up a company in China and even those who already own one. Nevertheless, if you are unsure or would like to talk to us about your specific situation. Don’t hesitate to contact us by calling us (+1 (561) 729 6508) or sending us an email (info@incorpchina.com).

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6 Facts you should know about filing a Trademark in China

Filing a trademark to protect your intellectual property is an incredibly important step to take no matter where you want to conduct business. Since every country’s trademark laws differ, Incorp China has compiled interesting facts you should be aware of before filing your trademark in Mainland China:

 

  1. First-to-File Concept

Think of it as a first-come-first-serve basis. Whoever files the trademark first owns rights to the idea. A good example is the iPad-scandal in 2012 that cost Apple $60 million. Proview Technology had filed a trademark for the name “iPad” in China. Hence Apple was not legally able to sell the iPad2 under that name. For more info on the case, Reuters Shanghai (https://www.reuters.com/article/us-apple-china/apple-pays-60-million-to-settle-china-ipad-trademark-dispute-idUSBRE86104320120702) wrote a great piece on this.

Facit: Early filing is paramount. File a trademark before you go ahead with business.

 

2. Trademark Applications Take Time

The duration for approving a trademark in China can take between 9-24 months. But don’t despair – once your trademark is approved it will be valid for the next 10 years from the date of registration.

Facit: Plan ahead – this doesn’t mean you cannot go ahead with your everyday business but beware of your business’ liability.

 

3. Use Requirements

Not using your trademark for three consecutive years from the date of registration in Mainland China might make it subject to cancellation. There are no use requirements beyond that.

Facit: If you invest in a trademark use it sooner rather than later.

 

4. Your Brand Name Is Your Wealth

register your trademark in both English and in Chinese text (e.g. the name of the product). Registering your brand or product name in Chinese will ensure that Chinese consumers will remember your product’s name better. Even more importantly though, if you don’t register a Chinese name, someone else could register a Chinese translation of it and therefore trick customers into believing their product is affiliated with your brand. Think of the American brand New Balance and it’s fake Chinese counterparts: New Bunren, New Barlun, New Bailon, and many more.

Look at what happened with basketball legend Michael Jordan vs the knockoff brand Qiaodan: https://www.nytimes.com/2016/12/07/business/international/china-michael-jordan-trademark-lawsuit.html

Facit: Your brand name goes beyond a pretty logo – protect your reputation by owning the legal rights to your Chinese name as well.

 

5. Divide and Conquer

Incorp China advises its clients to apply for the English and Chinese trademark separately. That way, even if one application is rejected, the other one will not be influenced.

Facit: Don’t put all your eggs in one basket.

 

6. Color Theory

Most logos are colorful. Submitting your trademark application in a certain color, however, will limit your use of the trademark to that single color. In practice, this means that if you trademark your logo in red you will not legally be able to stop other people from using your logo in the color green. Hence, we strongly suggest our clients send us a digital copy of their logo in back and white. The trademark protection will then cover all colors.

Facit: For your logo to apply to all color schemes, submit it in black and white.

 

Like what you read? Why not call us (+1 (561) 729 6508) or email us (info@incorpchina.com) for a free consultation. Let your paperwork be dealt with by experts on the ground.

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Breaking Down The Trademark Application Process in China

Everybody is familiar with the fundamental concept of trademarks. You have an idea or name and want to protect this intellectual property from being copied or claimed by someone else.

The process

In simplified terms, in China, this process takes about four steps.

  1. Do your research. It is advised to do a Trademark Pre-Filing Search. You can hire an agent via Incorp China to check with the China Trademark Registration Office whether the trademark you are about to register has already been applied for by another entity. If this is the case your application would be rejected immediately were you still to go forward with your application.
  2. Prepare the paperwork and choose a classification for your trademark.
    Your trademark can include anything from words, designs, letters, numerals, 3D symbols and graphics and even a combination of colors. Do stay clear of city names as well as words and family names with political history. There are several classifications that your trademark can be filed under.
  3. Submit the trademark application and wait for the result of the initial review. Once your application is approved you will receive a Notice of Acceptance.
  4. The Notice of Acceptance will be issued in a newsletter referred to as the Gazette for three months. As long as the China Trademark Registration Office does not receive any objections during this period, your application is not rejected and the trademark will be granted.

As you can tell, the Chinese trademark application process is not too different from that of the US. While, however, according to the International Trademark Association (INTA) in the US “over 95 percent of trademark applications are filed electronically”, in China it is highly beneficial to file your paperwork via an agent. As a foreigner, your paperwork will likely not be prioritized. Furthermore, having a native Chinese agent fill out and check your paperwork will mean there will be a significantly lower chance of making an error. If you were to make an error your paperwork would be rejected and you may not be refunded the application fees.

Thankfully Incorp China offers a free consultation. Let us help you. Call us (+1 (561) 729 6508) or email us (info@incorpchina.com) and we will be happy to answer any questions. Incorp China is backed by a team of fantastic lawyers who have filed for hundreds of trademark applications.

Liked what you read? Read about our top 6 tips you need to know if you want to file for a trademark in China

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How to save money and time through effective negotiations.

Without any discussion, money and time are the most valued resource for business. For western companies, traveling to china can be an investment due to the utilization of this two resources. Think about the costs of traveling, lodge, transportation, and the time spent on meetings or any process like registration and permits application. This case is about how one of our clients has saved through our effective negotiations.

Paperwork is expensive

In this case we are not talking about the fees involved to get paperwork filled out and submitted to register a WOFE. We are talking about the clients’ travelling expenses to personally sign the documents in order to get them approved.

Thinking outside the box

It just so happened that a US client of ours, a jewellery manufacturer, had to fly to China for business reasons unrelated to us. While his WOFE application was pending and his licenses were being processed, the company did not officially exist yet in China. However, Incorp China believes in seizing opportunities. Since the client was already on the ground we decided to visit a local bank branch who we frequently work with. Could we open up a bank account for the soon-to-be company  saving the jewellery manufacturer the fare for a second trip across the world?

Patience and persistence

Usually it is absolutely impossible (even as a local Chinese) to get a bank account opened without the corresponding business license. With our local Chinese staff and a lot of patience, networking and preparation we were able to convince them how detrimental it is to this business to sign the required legal documents for a bank account right away. The bank account would be pending the readiness of the business license and tax certificate and be officially opened once both the WOFE business license and the tax certificate were approved.

If your company needs to get a service done quick, we will give it our best to deliver – just because, against all odds, it sometimes actually works. In this case we saved our client a few thousand US Dollars and a lot of personal time.

Read more about how we solve problems opening up bank accounts for foreigners

Convinced? Then take advantage of a free consultation! Call us today: +1 (561) 729 6508

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