Chop Me, Mick!

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
4. Hurdling Through China
5. Nail the Filing