Conversion of Processing Trade Factories into FIEs

Update time:2016-02-22  source:

From the legal point of view, processing trade factories cannot be “converted” into FIEs. In actual practice, such conversion means the deregistration of an existing processing trade factory and the establishment of a new FIE in its place.

The conversion of processing trade factories may basically take two forms. The first is to deregister the existing factory first and then establish a new FIE, and this involves a longer period of business suspension. The second is to establish an FIE first and then deregister the factory.

By using this method, there is no need to suspend operation and the factory’s equipment may be injected into the FIE in stages by way of internal transfer or payment of customs duties.

General production enterprises applying for conversion must first obtain approval documents from the following organs: industry and commerce bureau, environmental protection bureau, enterprise code administration centre, economic and trade bureau (trade and industry bureau), public security bureau, bank, taxation bureau, financial bureau, foreign exchange administration, Customs and other government departments.

Prior approval is required for specific industries such as health, printing and advertising. For details on procedures for the establishment of FIEs, see 2.2.

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