We seem to have avoided death so far, but now we are dealing with that tax thing. I guess that only leaves one major problem to deal with, and hopefully that won’t hit us for a while.

After receiving our tax registration last week, RightSite has encountered a new onslaught of bureaucratic formalities. Here’s a selection of the procedures that need to be tackled now that we are a 100% legal foreign invested enterprise (WOFE, WFOE, or WhatEverFE).

• New Chops — We already had our company chop, but we needed to rush out and make a finance chop, a personal chop for me as legal representative, an invoice chop, and a contract chop
• Filing With the Tax Bureau – yes, we are now registered, which means we have to file. Pretty simple for this month since we have few transactions, but we need to do it by Friday. Yikes!
• Temporary Bank Account — to operate our company we need cash, to get cash we need to bring in capital, but this capital needs to be registered with the bureau of foreign exchange. But to be registered, the capital needs to be here, and you can’t open a company account before your capital is registered. So we need to open a temporary bank account. GRRRRRRrrrrr.
• Capital registration — this is not actually tough but can take some time
• Opening the company bank account — also pretty easy, but we have to get those earlier steps done first and there are some new requirements.

So we will be visiting a lot of agencies and filling out a lot of forms this week. At least our new chops will be able to get some exercise!

The Chops

For someone who has not spent time in China this can be very confusing, but these chops take the place of a signature for legal documents in China (and Vietnam too).

• Company Chop — used for contracts and all legal documents that need to be filed with government agencies
• Finance Chop — used for checks and other bank transactions
• Personal Chop — belongs to the legal representative and is also necessary for bank transactions
• Invoice Chop — used to issue invoices to clients
• Contract Chop — this can be used in place of the company chop on contracts. Useful if the legal representative wants to delegate some authority to a sales manager or other executive

Bank Account Alert!

Although it has only be less than four years since I set up my previous WOFE in China, there are always a few new developments in the way things are done. In the last four years, capital investment requirements have gone down, which is good. But I found out last week that while the government requires less capital, the banks require more.

When I opened our company account for 8 Days at CITIC Bank in 2005, I think we walked in with about two kuai in paid up capital on a registered capital of US$140,000. Now,the two banks that I have targetted for RightSite, CITIC Bank and China Merchant’s Bank, each have registered capital requirements higher than the government required for our company (our minimum required registered capital now is US$100,000).

• CITIC Bank minimum capital for a WFOE account — RMB 1,000,000
• China Merchant’s Bank minimum capital for a WFOE account — RMB 2,000,000

Although I ran a successful company through CITIC bank for several years, they were not flexible on this requirement. Luckily, the folks at China Merchant’s Bank attended a few of my swanky GlamCham parties last year, so waived the minimum registered capital requirement for us.

Just one more thing to get ready for in a place where you should always be ready for anything.

Related posts:

1. Chops Ahoy!
2. A Good Bureaucracy Experience
3. Schmooze Season

This week marked the beginning of the RightSite Schmooze Surge.

We’ve already told you about our nifty marketing plan, our cool site design, and our recruitment strategy, but this week we put into play one of our most powerful business tools — the Schmooze Surge. After months staying cooped up in our Tongren Lu headquarters, we have emerged into the daylight and are starting a networking frenzy.

Key to our network marketing approach is chamber of commerce participation. In my old role running an entertainment magazine, we went to club launch parties and art exhibits. But those are not the type of events that industrial property folks generally frequent. Meetings like Lessons Learned Series: Dow Corning’s Siloxane Project, Zhangjiagang, are more our speed these days.

While the events may be different, and the faces a bit rounder and grayer, the routine remains the same. Shake hands, distribute name cards, practice smiling and holding your wine glass at the same time. I attended two chamber of commerce events this week, and after a few hundred more should have had a pretty good chance to tell the world about the wonders of RightSite.

Apart from attending cocktail parties and committee meetings, we managed to reach a few other milestones this week:

• Tax Department Registration Completed — hooray! WE BUSTED THROUGH THE LAST BUREAUCRATIC BARRIER. With receiving our tax registration this week we are now certified to operate as a company, including setting up a bank account and billing our clients. We still will need about two weeks to receive the book of fapiaos (tax invoices) that we will need to bill our clients, but since the site is not even up yet, our ability to bill people is not a critical concern just yet.
• Layout Design Completed — On Monday we approved a final version of our InterSite design, which marked the last of our layout tasks. Now we can concentrate on building the actual pages.
• Development Server is Up — Now that we have started building the site, we have also begun to put some of the elements that have been built onto a development server for testing. This means that rather than looking at descriptions of how the site would work, or gazing at .jpg files of layouts, we actually have html pages on a server that we can click on and watch things happen. Not much to click on just yet, but that will all change next week.

What’s Coming Up

Here’s a quick preview of what we’ll be up to in the next 10 days

• Looking for an office (still haven’t found a %$#@! place to call home)
• Site translation — most of the translation is done automatically in Drupal, but we will still need to make manual alterations.
• Static content creation — We need to start writing all those miscellaneous bits of the site such as help files, About Us, and all kinds of other miscellaneous content. Not that much writing, but we will be living with what we write for a long time, so it would be good to do a proper job of this
• Bank account set up- Now that we have a company, we need a bank account, so getting this established will allow me to stop running the company out of my own pocket. (Even if the money still comes from the same place, the tax authorities prefer a bit more transparent way of running things).
• Accounting system — with our new company we need to set up an accounting system. We have hired a company to assist with this, but someone still needs to tell them what to do.
• Marketing materials — We have finalised a contract with Paper Stone Scissors to start creating all of the cool stuff that will help make our site famous. We promise to share examples of these fun items as they become available.

After reading this list, I realise that I had better stop blogging and get back to work. Enjoy your time, whatever you’re doing, and see you again soon on Mingtiandi.

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1. This Little Piggy Goes to Market
2. Chops Ahoy!
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Continuing our ongoing RightSite saga, we reached some big milestones last week and are ready for more action in the days to come.

The big event happened on Friday the 23rd, when we received our company chop and the official copies of our license documents. For those of you unfamiliar with paperwork in China (and paperwork is pretty important in China), the chop is the equivalent of a signature elsewhere in the world. This little chop that we received is our company chop, which is used for contracts and other official documents.

Once we are through with the tax department formalities, we will receive our finance chop. The finance chop, together with the personal chop of the executive director, are necessary for any financial documentation or procedures. Checks, bank transactions, anything like that needs a finance chop.

On a practical basis, now that we have our company chop we can sign an office lease in the name of the company and hire staff with legal employment contracts. So we are one step closer to being fully operational.

Looking at less bureaucratic matters, we failed to complete our functional requirements documents for the website last week. Ouch! Our developers in India are still struggling to put together the document for the MyRightSite pages that will tell us how external users can control their information on the site. It’s a pretty big document, so we can’t do much until that is ready. We should receive a draft of the document later today (yup, even on Sunday) and then hope to wrap up a final version by Wednesday.

Once we have our functional requirements documents completed, then we can actually start to build the site. Everything that we have done so far, whether it was the internal company work that started in December, or the work with our development vendor that started in the beginning of April, has all been some kind of planning. This week we actually start putting together the pages of code that will make RightSite work.

If everything goes well, then I should have a site to show you in about six weeks!

Have a happy week and see you again soon on Mingtiandi.com

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1. Chop Me, Mick!
2. Hurdling Through China
3. This Little Piggy Goes to Market

Another week begins.

Another milestone reached.

It was a big day in Rightsite history today as we received a copy of our business license from the Commerce Office here in Shanghai. This means we have a company. We are real, and we are legal. Next milestones coming up:

• Receive our chops — we need these for signing official documents. Should get them within two weeks
• Register with the tax office — this is the last major bureaucratic step. It should take one month
• Receive our tax invoices — after we register with the tax office, it should take two more weeks to receive our first book of invoices

So we are on our way to having a fully operational company by the middle of June. Sure, we have a company now. We can legally hire staff, rent an office and enter into contracts with other companies. But we can’t bring in any money until RightSite is registered with the tax office and receives its book of tax invoices (fapiaos). And since we formed this company to make money (not just to give it away), these fapiaos become pretty important.

Since we also need a website to take in money, we are hard at work this week planning and designing our site. On this week’s web development agenda we have some major design issues to resolve

• Page layout — will be deciding the content and style of each page in the site
• Search results display — will plan how to display information when users search our site
• Advanced search — we covered basic search last week, so now it’s time to decide what details users can look for through an advanced search
• Review Requirements documents — after spending all this time gathering our requirements, we are starting to organise these requirements into structured documents. These dox will later be used to begin building the site

Besides the bureaucracy and the geeky tech issues, we have one more intern joining our company this week. Look for an introduction to Carol The New Intern tomorrow, plus a sneak preview of our RightSite layout design.

Until then, happy surfing!

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3. Designing Our Future

Just got back from the Commercial and Administrative Bureau

• 90 minutes
• 28 signatures
• 1 photo
• 5 trees sacrificed (estimated)

I haven’t signed so many forms in a long time, but a very productive session. We actually met face-to-face with the Xuhui District Commercial and Administrative Bureau staff. They were very helpful (although 90 minutes of form signing is a bit much).

But Rightsite Website Technology (Shanghai) Co Ltd is now approved by the Commercial and Administrative Bureau. Next come the chops.

We soon will have the following chops:

• Company chop
• Contract chop
• Invoice chop
• Michael/Gaoming personal chop

After all, what’s the point of coming to China if you don’t get the chops?

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2. Chop Me, Mick!
3. Chops Ahoy!

I know, I know – I’ve been lazy about updating this thing. But sometimes life as an entrepreneur is just too exciting for words.

Two big issues on the plate today:

Issue 1. That elusive WFOE license: Am meeting with the Commercial and Administrative Bureau this afternoon to help them understand the company business plan and budget so they can put their chop on RightSite Website Technology Ltd and send our company rolling along to the next government bureau for approval.

If you said, “What the h*** is a Commercial and Administrative Bureau, then you have forgotten that China is still a Communist country. The Commercial and Administrative Bureau are basically economic police who make sure that companies are doing what they are supposed to be doing. Remember that earlier post about the minute details in business licenses? Well, the Commercial and Administrative Bureau are here to put those details into your license, and to make sure you don’t forget them.

So this afternoon, we’ll be meeting with them to let them know how RightSite is going to work.

Issue 2. Choosing that elusive website vendor. Yes, after nearly three months, I have still not decided on vendor to build our website. One of our top priorities in choosing a vendor is getting a detailed proposal for the first two stages of the site development. Basically, we want to take care of all of the development needed to allow the site to operate and be able to sell memberships on it.

In order to get this detailed proposal for the two stages of the site, however, we have had to develop very detailed requirements for all aspects of the site. So for me, the month of March has meant mapping out a thirty page list of features that the site needs to have, and explanations of how the features should work.

All of this has already gone out to the three web developers still in the running for this project, and I expect to receive detailed proposals from them by wednesday. Once we get the detailed proposals, then it’s time to choose a vendor and negotiate a contract.

I now expect the actual design and building of the site with the development vendor to start on April 1st and for the first stage to be complete on June 30th. A huge change from my original schedule.

However, by spending the time developing our requirements to this level of detail, I am much more confident that we will be getting the website that we want, and a website that our users will enjoy.

Now if only I could be that confident about the Commercial and Administrative Bureau.

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1. A Good Bureaucracy Experience
2. Designing Our Future
3. Chops Ahoy!

Returned to Shanghai more than a week ago now, so it’s time to get back to the blog as well — the world needs to know about the fun of starting up a new media company in Shanghai.

Already had one exciting development this week – unfortunately, it was thrilling only in the area of adding a new layer of frustration. This very expensive new thrill came from finding out that we need one more document for our WOFE company before our application can be processed, a verification from the Chinese government authorities in our offshore company’s home jurisdiction (that’s Samoa for us) that our company is a real corporation. I thought that the incorporation certificate issued by the Samoan government accomplished this, but apparently since December 2007, you also need a notarised letter from a Chinese consulate or embassy.

We should get this letter within a month (ouch) and then we can get back on the road to receiving the all important chops. Oh, and it costs US$425/copy of the letter and one copy each is needed for the Administrative Bureau and the Foreign Capital Registration Office. Anyway, there is no struggle on this one. Agent should have told us about this document earlier, but now we just add another month onto our project calendars and shake this one off. Doesn’t hurt a bit.  Nope. We’re bound to be a huge success, so wasting a month of our time makes no difference to us, you bet.

Other bureaucratic news:

Decided at the last minute to register my new company in Xuhui District, rather than Songjiang District. According to my agent, the Shanghai government is beginning to crack down on companies registering in outer districts and special economic zones that are not really based there.

Xuhui district is good though. Former French concession, lots of trees. Maybe there’s less spitting.

The other major task is trying out web development companies. This week am meeting with five different web development shops to see who can help us make a fantastic site for the US$1.50 budget that we are working with. (Budget jokes aren’t really that funny, are they)? Here’s a few of the shops on this week’s list:

• Ekohe
• EmporioAsia
• Chinaclick
• Symbio
• Revere Group
• Beta Software

They all seem experienced but it’s a group of companies that ranges from 4 employees to over 1,000, so there is a wide variety of factors to consider. Readers who have experience with any of these shops are encouraged to comment here, and thanks to Jerry Lin, Calvin Wu and Justin Chaffey for introducing me to these companies.

Am expecting my first project proposal from one of these companies tomorrow. Will let you know how it goes.

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2. Just Another New Kid in Town
3. Chops Ahoy!

It’s Tuesday, but the end of the week feels like it’s closing in fast. Maybe it’s the snow. Or maybe it’s just knowing that tomorrow, the 30th of January will be exactly one week from the start of Spring Festival, so any meaningful opportunity to get things done stops pretty much now. That makes this a pretty good interval for assessing project progress to date. Unfortunately, WordPress doesn’t have a Microsoft Project plug-in yet, so we’ll do this in narrative format. Maybe throw in a few bullet points for you business school graduates.

I officially left my old company on 21 December 2007, and at that time, I set out the following major goals to be accomplished by Chinese New Year.

1. File for the new WOFE (Wholly Owned Foreign Enterprise)
2. Register the company trademarks
3. Begin development of the new site

Now with one week to go before the holiday, and only three working days left before I escape to Thailand for a beach holiday, I am happy to join with Meatloaf in saying, two out of three ain’t bad. The WOFE was filed for today by Winni the Wonder Assistant — hooray! The trademarks were all taken care of last week. And the site development? Well, I am sure that by waiting until after Spring Festival to get this done that we will be much better prepared to build a great site for less money than if we had charged forward to get it done right away. (Did you notice the management stragegy on that web development bit? There’s a name for it – it’s called declare victory and retreat. Write it down — if you haven’t used it yet, you will need it someday).

Looking at the list above, it may not look like we have done much, but just getting the WOFE registered required many steps and procedures.

1. Founding an offshore company
2. Setting up a bank account in Hong Kong
3. Signing an office lease
4. Choosing English and Chinese company names
5. Designing a strategic business scope
6. Choosing the most advantageous district to register in
7. Developing a business plan

And the folks in China even want all this done in Chinese!! Most of this work we did ourselves (that’s me and Winni the Wonder Assistant), and then we are using a local friend to push the filing through the various government bureaus. (The important entities to deal with are the Commercial and Administrative Bureau and the Tax Bureau, but several agencies are usually involved, depending on your company’s business scope).

Actual government fees involved? About RMB 15,000. Consulting fees for saving me from having to meet with a dozen government bureaus? About RMB 30,000. If you feel better about having all of this work done by someone who sits in a US$500 Herman Miller chair, you could hire PWC to set up your WOFE for you, but they just farm it out to local consultants anyway. The work that is, not the chair.

So, during my week in Koh Lipe (starting on Saturday) I will be working developing the detailed brief for the new site, so that when we do locate a new web development company that things can progress as quickly and smoothly as possible. In the meantime, if any of you have recommendations for dependable web development firms, please send them my way!

See you soon!

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1. Nail the Filing
2. Back in Town and Back to Building Companies
3. Chop Me, Mick!