Rich manufacturing experience, low production costs, huge and increasing consumer market and so on, all of which stand for the huge business opportunities in mainland China for overseas investors. To ensure smooth development of business in mainland China, overseas investors need to acquire a reliable professional advisor. Conpak has profound understanding of China's economy, legal system and taxation systems, we can provide efficient professional service, from company incorporation, taxation to personnel recruitment, and so on. The following introduction is prepared for investors who intend to invest in mainland China. It includes some primary information for reference.

Business environment

According to the undertakings made by China upon its accession to the WTO, the admission barrier for foreign capital has been gradually loosened, allowing foreign capital to invest in such sectors as finance, insurance, trade, retail and services. In administration over foreign trade, China has considerably lowered the duties. Furthermore, the exchange control will also gradually loosen. With the positive development of the legal system, the enhancement of the quality of people and the strengthened opening to the outside world, China will bring about a better business environment for foreign investors.

Infrastructures

China has built a comprehensive transportation network with railways being the backbones and complimented by highways, sea transportation, aviation and pipe systems. In terms of post and telecommunications, a public telecommunication network has been built covering the whole country and extending to other parts of the world. China's postal network ranks number two in size with high density of service points, and offering complete services.

Company incorporation

In China, the common forms of company incorporation are wholly foreign-owned enterprise, Sino-foreign equity joint venture, Sino-foreign co-operative joint venture and foreign representative office, etc.

• Wholly foreign–owned enterprise
  Wholly foreign-owned enterprise is a company with limited liabilities in which the capital is invested by foreign investors. A foreign-owned enterprise exercises independent accounting and is responsible for its losses and profits. A wholly foreign-owned enterprise does not include branches of foreign enterprises.
• Sino-foreign equity joint venture
  Sino-foreign equity joint venture is a company with limited liabilities invested and operated jointly by the Chinese party and the foreign party. A Sino-foreign equity joint venture assumes responsibilities for losses and profits according to their investment proportion.
• Sino-foreign co-operative joint venture
  A Sino-foreign co-operative joint venture enterprise does not take the investment amount, stock equity etc. as the basis for profit distribution but defines the rights and obligations through contracts entered into.
• Foreign representative office
  A foreign representative office generally represents the head office in conducting liaison work but is not allowed to conduct substantive operations in China.

Exchange control

China exercises exchange controls presently, but investors may remit their profits through the banks after tax payments.

Taxation

The "Income Tax Law of the People's Republic of China for Enterprises with Foreign Investment and Foreign Enterprises" is applicable to foreign-funded enterprises. In China, taxpayers are administrated according to their locations and identities. All profits derived from China or other countries by a foreign-funded enterprise, are subject to income tax, and the income tax rate applicable to foreign enterprises is 25%. In some regions, there are preferential policies which offer preferential rates as low as 7.5%. Generally, taxable items of an enterprise include:

VAT	Basic rate:17%, lower rate:13%
Business Tax	3% for communication and transportation, 5% for other trades
Enterprise Income Tax	Basic rate: 25%
Individual Income Tax	5% - 45%
Dividend and bonus of foreign individuals	Exemption
Income protection	Subject to the transfer pricing agreement
Other taxable items	Consumption tax, real estate tax, stamp duty, land value added tax, tariff

Intellectual property

With the acceleration of economic globalization, the Chinese government endeavored to improve intellectual property laws, cracking down on piracy and intellectual right infringement, with an aim to attract more foreign investors and protect the intellectual property.

Employee Recruitment

In China, a labor contract is required for employment of every employee; the rights and obligation of the both parties are needed to be set out in the contract.