Interview with iadvisor Caroline Berube: Set Up in GuangZhou, China

New iadvisor Caroline Berube of H.J.M. Asia Law & Co is a lawyer based in GuangZhou, China. She shares on the business opportunities that are available, as well as legal issues companies need to take note of when setting up in China.

What are some legal issues that Singapore companies should take note of when setting up in Guangzhou?

On a broad note, it must be noted that the rules and procedures relating to the setting up of a company are far more onerous and restrictive in Guangzhou (and China in general) than in Singapore. One cannot simply register a foreign-owned company for a few hundred dollars and then let its operations evolve over time. For example, a company must have a specific business scope, a minimum amount of registered capital (starting at RMB 30,000.00, approx. SGD 6,000.00, for a consulting company with two shareholders), a commercial lease for its registered address and details of its key management personnel. Such elements should be considered carefully as they are often time-consuming and expensive to amend. Accounting and legal compliance should also be taken care carefully to ease the repatriation of profit process of the company.

What are some of the relatively untapped sectors that are suitable for Singapore companies in Guangzhou?

When looking into China, we have found that Singaporeans benefit best when they take advantage of a combination of the language skills/cultural similarities of many of its own citizens with those of China, and its developed infrastructure, standards and know-how. Singapore’s existing manufacturing firms can look to outsource part of its operations to China, dispatching Singaporean managers and quality control experts to oversee the operations. China is also thirsty for high-quality technology and biotechnology where Singapore is very strong. Guangzhou continues to expand and many local companies lack the expertise and/or experience to successfully cover such projects on a large scale. In particular, there is a demand in Guangzhou for renovation and rebuilding, unlike other parts of China where many of the cities are built from literally no base.

Other sectors known to have largely remained untapped include the insurance, finance, distribution, advertising, accountancy and film sectors/industries. However, these sectors hold restrictions to foreigners, i.e. foreigner can’t hold a majority stake in such business in China and must obtain numerous licences and permits.

What tips can you provide to Singapore companies planning to venture into China?

Firstly, a Singaporean company (although this answer can be applicable to any foreign company) must perform its due diligence; it needs to research thoroughly which city to enter in China as each city has its expertise, strengths and weaknesses. This is especially important in light of Chinese company laws requiring that the finer points of the company (its operations, registered capital, key personnel) must, as mentioned above, be organized around the time of incorporation. A representative office can engage in market research and liaison activities; it cannot get involved in profit making activities, although such legal entity is far easier and a bit cheaper to set up. Further to entity setup, a company needs to understand China’s strict currency regulations, decide on any trade terms (possibly engaged locally experienced advisors on such issues) and engage in thorough research on the credit standing and reliability of its local partners.


All answers are provided to the best knowledge of the iadvisors at the point of answering, and are solely represented by the iadvisors, not IE Singapore.

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