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Are there preferential policies for setting up a company in China?

In addition to the Catalogue of Encouraged Industries for Foreign Investment (see FAQ “Are there restrictions for setting up foreign-invested companies in China?“), in general all local-level authorities – starting from district/park level to provincial level – have some latitude to adapt and apply local rules which may be advantageous to FIEs.

The key point to keep in mind is that local governments in China often compete very fiercely to attract foreign direct investment within their jurisdictions, particularly when involving advanced technologies or operations in line with national or local priorities. Therefore, in order to increase their attractiveness vis-à-vis other competing local administrations, local administrations regularly offer a series of incentives and preferential measures, such as relaxed market access requirements, favourable terms for the acquisition of suitable land, fast channels to obtain permits or licenses, tax rebates, etc. Preferential policies are generally specified in ad hoc policy docs available on the websites of the local administration, but it has been reported that ad hoc incentives tailored to the investor’s specific needs may be negotiated in case of particularly strategic and large investments.

Furthermore, Chinese Free Trade Zones may pilot innovative policies with respect to finance, customs, liberalisation of foreign investment, tax treatment, and simplified administrative measures such as reduced investment barriers with respect to the qualifications of foreign investors, application requirements of some licences, equity holding percentage and business scope restrictions.