Success Story
Tam Hangers
Tam Hangers is a global provider of sustainable garment hanger solutions, committed to environmental responsibility and innovation.
- Website: tamhangers.com
- Year: 2020
- Services:
- Trading WFOE registration in Shanghai
- Tax and accounting
Tam Hangers
Case Study
Who is Tam Hangers
Tam Hangers is a multinational clothe hanger manufacturing and hanger service logistics company with a mission “to change the global retail industry by offering garment hangers and packaging solutions that are better for business and the environment.”
Tam Hangers distinguishes itself by promoting and shaping their business around the reusability and redistribution of commercial clothe hangers. Instead of buying, using and disposing hangers, retailers can send their hangers back to Tam Hangers for recycling or re-processing which cuts pollution emissions from manufacturing by 70%.
Tam Hangers features an online portal with a wide array of hanger styles. This business model of reusing hangers and re-distributing them into the market causes more hangers to be in circulation benefiting clients by providing:
- Lower transportation cost
- Lower import fees
- Lower emissions (smaller carbon footprint)
- Lower total cost
Employer of Record Service for Tam Hangers (EOR)
Tam Hangers initially requested our Employer of Record service for hiring 4 employees in China in July 2020. In the absence of a legal entity in China, Tam Hangers hired local employees in Shanghai through FDI China’s legal presence. We entered a two-way contract between the employees and FDI China, and FDI China and Tam Hangers in order to hire staff on their behalf in China so that they could commence operations.
Entry into China during Covid-19
In August 2020, during the Covid-19 pandemic, Tam Hangers once again contacted FDI China to register a trading company in the Shanghai Free Trade Zone. Our account manager worked closely with upper management in Hong Kong and communicated the complications of setting up a company at this time amidst partial shutdown of public administrative offices.
Despite difficulties, Tam Hanger’s upper management based in Hong Kong was very fast to deliver the required documents to FDI China and both sides were very responsive in communications. They even worked past midnight on one occasion with one of FDI China’s account managers to finalize paperwork.
Once the business license was issued, we were able to assist with the opening of the newly formed Wholly Foreign Owned Enterprises corporate bank account at HSBC China. This was simplified by the fact that Tam Hanger’s Hong Kong holding company they used was also using HSBC for their corporate banking. Following the arrangement of the corporate bank account, we secured Tam Hangers’s import/export license for… hangers.
In total, this entire process, from the initial application to the receiving of the import/export license, took 4 months to complete, from August to November. This was longer than normal due to the administrative delays during Covid, however with good communication and response time from both parties we were able to get the job done.
Post-registration & conclusion
After Tam Hangers was all set up in the Shanghai Free Trade Zone, we provided bilingual templates for employment contracts and transferred the employees they had outsourced us to hire on their behalf over to their newly wholly foreign owned enterprise. Following registration, the Tam Hangers team wanted to increase their registered capital post-registration. We contacted the government to adjust Tam Hanger’s registered capital to their desired figure.
In retrospect, the defining virtue that made the registration possible amidst partial government public service outage, was the dedicated communication and responsiveness from our staff and Tam Hanger’s staff. Maneuvering around the administrative challenges and making the most of our time.
Incorporation FAQs
What are the types of companies that foreigners can register in China?
Foreigners can register several types of companies in China, including:
- Wholly Foreign-Owned Enterprises (WFOEs): Fully owned by foreign investors.
- Joint Ventures (JVs): Partnerships between foreign and local investors.
- Representative Offices (ROs): A liaison office without independent business rights.
What are the basic requirements to register a company in China?
Key requirements include:
- A unique company name (approved by the local Administration for Market Regulation).
- Stated registered capital (varies by business type).
- A physical office address in China.
- Legal representatives and shareholders’ information.
- A business scope aligned with Chinese regulations.
How long does it take to register a company in China?
The entire process typically takes 1-3 months, depending on:
- The business structure.
- Completeness of documents.
- Specific location and administrative efficiency.
What is a WFOE, and why is it popular among foreign investors?
A Wholly Foreign-Owned Enterprise (WFOE) is a legal entity fully owned by foreign investors. It’s popular because:
- It allows full control over operations.
- It can issue invoices (fapiao) and engage in profit-making activities.
- It protects intellectual property.
- It permits hiring staff directly.
How much registered capital is needed to open a company in China?
China does not mandate a minimum for many industries, but having sufficient capital demonstrates financial strength.
The registered capital amount varies based on industry and business location.
- For general consulting WFOEs, RMB 100,000 to RMB 500,000 is common.
- For manufacturing, logistics, or trading, it can exceed RMB 1 million.
Can I register a company in China without being physically present?
Yes, in many cases, you can delegate the process to a local firm like FDI China. However, for opening a bank account, personal presence is required.
Do I need a Chinese partner to start a business in China?
No, you don’t need a Chinese partner to register a WFOE. However, if you opt for a Joint Venture (JV), you must collaborate with a Chinese entity.
What is the role of a legal representative in a Chinese company?
The legal representative is the person who has the authority to act on behalf of the company. They:
- Sign key documents.
- Represent the company in legal and financial matters.
- Are responsible for the company’s compliance.
This person can be a foreigner or a Chinese citizen.
What is a business scope, and why is it important for company registration?
The business scope defines the activities your company is legally allowed to perform in China. For example, “import/export trade” or “IT consulting services.”
A well-defined business scope ensures compliance and prevents issues during tax filing or licensing.
Can a foreign company own property in China?
Yes, a foreign company can own property in China if it is registered locally as a WFOE or JV. Representative Offices (ROs), however, cannot directly own property.
Do I need a commercial ICP license to operate a business website in China?
Yes, if you plan to run an e-commerce website or any profit-generating online platform, you must obtain a commercial ICP license. Non-profit websites only require a standard ICP filing.
Can I register a company in China and hire foreign employees?
Yes, foreign companies can hire both local and foreign employees. To hire foreign staff, the company must provide a work permit and assist with the visa process.
What are the post-registration compliance requirements?
Once registered, a company must:
- File taxes monthly & quarterly.
- Maintain proper accounting and auditing.
- Follow labor laws for employee contracts and social insurance.
Can a company in China send funds overseas?
Yes, a company in China can send funds overseas.
The process depends on the nature of the transaction.
Payment for Goods or Services
- Requirements:
- A valid contract or invoice.
- Proof of goods received or services rendered (e.g., customs declaration, shipping documents).
- Proper documentation for foreign exchange approval.
Dividends Repatriation
- Requirements:
- The company must complete annual financial audits and profit distributions.
- Corporate income tax must be settled.
- Submission of supporting documents, including the audited financial report, board resolution, and tax payment certificates.
Royalties and Licensing Fees
- Requirements:
- A licensing or technical service agreement.
- Tax clearance or proof of withholding tax payment.
- SAFE approval, depending on the amount.
Employee Salaries and Benefits
- Requirements:
- Work permits and contracts for foreign employees.
- Tax clearance certificates.
What restrictions exist on foreign ownership and investment for certain industries?
China uses a Negative List for Foreign Investment to outline restricted and prohibited industries.
- Restricted industries: Foreign ownership may be limited to a joint venture with Chinese partners or capped at a certain percentage.
- Prohibited industries: Foreign investment is outright banned.
Examples include specific areas of telecommunications, education, and cultural industries. Always review the latest Negative List as it is periodically updated.