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Chinese Law/How to establish a business in China without giving your partner too much power/influence in the company?

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Question
Dear Mr. Dong,

I would like to manufacture a product within mainland China, and distribute the product to various shops throughout this country. I have a friend, who is a Chinese citizen, who is happy to help me do this.

I'm happy for all the documents and paperwork concerning law, tax and other corporate matters to be in his hands, because my knowledge of Chinese law/tax is minimal and my Chinese language ability is not fluent. I will only make mistakes if I have to sign Chinese documents and assume knowledge of Chinese corporate law. Also I am not familiar with all the other responsibilities and restrictions on foreigners managing businesses in China.

However, since all documents and legal certificates will be in his name, how can I ensure that I remain in control of the ~50% of my company and I receive the appropriate amount of post-tax income? I don't want to wake up one morning after an argument with him and find that I can no longer manage the company with him as I may not have to legal right to.

Thanks for your time,

Li

Answer
Hi Li,

There is not any restrictions for foreigners managing businesses in China.
you can run your business by yourself without any restrictions.

If your business is totally controled by your friend, there would be no insurance for your benefit.

rgds

Dong  

Chinese Law

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John Dong

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Chinese Lawyer. Practiced in Guangzhou, China. I can answer questions about Chinese businese and commercial law especially investment in China.Also I can answer other question about Chinese law. skype: johnsondong email: dong_xz#tom.com

Experience

Over 10 years practice in the field of Chinese law and international law. Extensive practice in company law, real estate law, banking, corporation establishment, foreign investment and other foreign affairs. intellectual property settlement, commercial litigation, civil litigation, administrative litigation, criminal defend, divorce, tort liability, product liability. Draft pleadings, defences, motions.

Organizations
Yingke Law Firm Guangzhou Office. Attorney at Law. Address: 15,16,17,18/F, B tower, Southern Media Building, No.289 Guangzhou Avenue M., Guangzhou, Guangdong, P.R. China. Post Code: 510610

Publications
Province Ruled by Law, Economy and Development, Jan. 1998. Auditors's Liability to Third-Party under the Jurisdiction of U.S.A, Hebei Law Science, May, 1999. The Legal Framework of Real Estate Mortgage, Postgraduate Journal of Jinan university, June, 1999.

Education/Credentials
Law School: Jinan University, Economic Law Department, LL.M (Masters Degree in Law) in Economic Law, 1997-2000. Zhongshan University, Law Department, J.D. in Economic Law, 1990-1994.

Past/Present Clients
V*** Inc. (US, NY), F*** Co., Ltd. (US, NY), V***, Inc. (US, CA), S*** Systems GmbH (Germany), S*** Ltd. (Japan), N*** Group. (Italy), W*** Gmbh&Co.KG. (Germany), N*** (CHINA) LIMITED(Hong Kong), L*** Limited of Hong Kong, D*** Bank, Ltd. (Hong Kong), K*** Industries Limited (Hong Kong), F*** Consultant Limited (Hong Kong), P***HoldingsCo. Ltd. (Hong Kong), N*** Holdings Limited. (Hong Kong) and etc.

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