One of the most frustrating things about doing business in China is the paper work.
I was cc’ed on an email the other day from one of our China company formation lawyers to one of our clients. The client had signed the documents required for a WFOE by ink that looked like the required ink, but wasn’t. We told the client that the local Administration for Industry and Commerce (the “AIC” is where WFOE filings go) would likely reject the application due to the wrong ink, but the client chose to go ahead anyway, so as to potentially avoid having to go through the signing process again. This email (with all identifiers hidden) is to let our client know that the AIC did in fact refuse their application and explaining what our client now needs to do to ensure acceptance the next time around.
To form a WFOE in China, you typically need around 25 documents, 33 originals, 594 signatures (18 times the 33 originals) and 297 seals (9 times the 33 originals). Fun stuff, let me tell you. One of our China lawyers was quoted the other day in a New York Newsday article on China, in which a China consultant talked about how forming a China WFOE takes 6-12 months. In American Firms Find China Hard Work, the Wall Street Journal noted the following from the recently released AmCham survey:
Investment approvals are particularly vexatious, with complaints ranging from apparently arbitrary decisions to excessive paperwork. The proportion of U.S. firms who think foreign and local companies compete on a level playing field with regard to approvals has fallen to 14% from 29% in 2011, according to the chamber’s survey.
The below email should give you a bit of flavor as to why forming a company in China can be so “vexatious.” In line with our expectations, the _______ AIC rejected your WFOE application documents for having been signed with the wrong ink. Accordingly, please have the attached documents re-executed.
The instructions for signing follow:
1. AOA-Chinese: We need 5 Originals, all signed by ____________ and bearing the seal of ___________.
2. AOA-English: For reference only. No need to sign or return to me.
3. Application form-Chinese: We need 2 Originals, both signed by both _________ and _________ and bearing the seal of ___________.
4. Application form-English: For reference only. No need to sign or return to me.
5. Application Letter for Economic promotion bureau-Chinese: We need 2 Originals, both signed by __________ and bearing the seal of ___________.
6. Application letter for Economic promotion bureau-English: For reference only. No need to sign or return to me.
7. Application letter for stamp carving-Chinese: We need 1 Original, signed by ____________.
8. Application letter for stamp carving-English: For reference only. No need to sign or return to me.
9. Appointment letter (executive director and supervisor)-Chinese: We need 3 Originals, all signed by __________ and bearing the seal of ____________.
10. Appointment letter (executive director and supervisor)-English: For reference only. No need to sign or return to me.
11. Appointment letter (General manager)-Chinese: We need 3 Originals, signed by all of the board members (i.e., _________, _______________, and ______________).
12. Appointment letter (General manager)-English: For reference only. No need to sign or return to me.
13. Foreign exchange registration application form-Chinese: We need 1 Original, signed by ____________.
14. Foreign exchange registration application form-English: For reference only. No need to sign or return to me.
15. FSR-Chinese: We need 3 Originals, all signed by _____________ and bearing the seal of __________.
16. FSR-English: For reference only. No need to sign or return to me.
17. Letter of authorization by legal person-Chinese: We need 2 Originals, both signed by ___________.
18. Letter of authorization by legal person-English: For reference only. No need to sign or return to me.
19. Letter of authorization for delivery of legal documents-Chinese: We need 3 Originals, all signed by ___________ and __________ and bearing the seal of ____________.
20. Letter of authorization for delivery of legal documents-English: For reference only. No need to sign or return to me.
21. Letter of undertaking to work safety-Chinese: We need 2 Originals, both signed by ___________ and bearing the seal of __________.
22. Letter of undertaking to work safety-English: For reference only. No need to sign or return to me.
23. The list of board members-Chinese: We need 3 Originals, all signed by _________ and bearing the seal of ___________.
24. The list of board members-English: For reference only. No need to sign or return to me.
25. Power of attorney: We need 3 Originals, all signed by _________ and bearing the seal of __________
IMPORTANT NOTES REGARDING SIGNATURES:
(1) The execution documents listed above have yellow “stickies” indicating where to sign, and whose signature is required. When you print these documents, make sure you do not print these notes as well.
(2) Make sure to use A4 paper to print the documents and that your printer is set to A4. Note the number of pages and formatting of the documents to ensure that the formatting is consistent. If you have problems printing the documents, we can mail them to you. If you do not use A4 paper and the proper formatting, the documents will be rejected.
(3) All signatures must be made with a fine point rollerball pen using water-based ink, such as a Uniball, or a fountain pen. Do not use a thick ballpoint pen or a pen with oil-based ink. Sign in BLACK INK ONLY. All signatures must match the signature in the respective person’s passport.
(4) On those documents where the company seal (of __________) is requested, the seal should be affixed over the signature.
Once all of the above documents have been signed, please scan and email a copy to me, and send the physical documents directly to our China company formation agent.
Got all that everyone?
