PathToChina.com

By Vincent Cheung from www.pathtochina.com   

Ministry of Education of China makes it mandatory for all of the students from elementary to college to take English courses, whereas Chinese courses receive far less attention. This is the status quo in China. English is ridiculously given way to much importance, and everybody seems to plan to learn it but only a pathetically small proportion of them have a clue what to do, meaning the rest of them might need your professional help. Have any idea how big China’s English education market is? There are roughly over 300 million of English learners currently and the annual market volume is like 15 billion yuan. It’s still growing at a remarkable rate and till the end of 2010, the market volume will rise to 30 billion yuan! In my eyes, China’s English training market can keep booming for at least ten years until the number of new generation of youngsters who benefit from the new English education methods in Schools and therefore are with much satisfactory English proficiency climb to a considerably high level. So, don’t hesitate to enter world’s biggest English training market.

  Is it Possible to Set Up an English training WFOE ( Wholly Foreign Owned Enterprise) in Shanghai?   The answer is negative. According to the “Catalogue for the Guidance of Foreign Investment Industries” (Amended in 2004), education, culture and arts, broadcasting, film and TV industries fall within the “Catalogue of Restricted Foreign Investment Industries”. Mr.Deng always emphasized that “ Stability rules”. Even in the internet era, Chinese people are still prevented from getting access into a lot of attention. A lot of information about the truth of China is blocked, cause the communist party doesn’t want foreign ideas to change Chinese people’s mind. If you seriously want to start your English training business in

Shanghai, there are two methods you can employ:
1. Starting a cooperative  joint ventures with Chinese partners 2. Cooperating with Chinese training school secretly   English training school is regarded as a so-called “Chinese-foreign cooperatively-run” school that offers vocational & technical training, which should be subject to the examination and approval of the department of labor. There are two steps you should go through: preparatory establishment and formal establishment.  

 You are required to provide following documents for the first step:

 1. a project report 

2. a cooperation agreement

3. valid certificates of sources of assets, amount of capital, property right.

4. a certificate verifying that not less than 15 percent of initial funds provided by the Chinese and foreign . cooperators is already injected.  

Upon the issue of approval for preparatory establishment( a letter will be sent to you if your application is not disapproved), following should be submitted to relevant authorities.  

1.    an application for formal establishment

2.     approval certificate of preparatory establishment

3.      a report on the progress of the preparatory establishment

4.      articles of association

5.      valid certificate of assets

6.      qualification certificate of the president or the principal administrator, teachers and financial staff.  

A permit would be issued if your application is approved within 6 months if you are qualified, and then you can set about registration procedures.  

The biggest drawback of getting involved in such contractual joint venture is the foreign investors lack of control over the entity. According to the regulations, the foreign party can only hold 25%-49% of the school’s share, which means they are subject to Chinese partners when it comes to decision-makings. Conflict might be raised in the cooperation. Besides, a minimum registered capital  of USD 14,000 can be a problem to some small investors with limited amount of capital. 

If you want to invest less money and take total control over the school, considering that foreign investors are not allowed to set up a wholly owned English training school in China yet, you are advised to cooperate with Chinese training school which is already licensed to offer English training service and has lectures building. You can set up a consulting company. Usually, 300,000 RMB of registered capital is sufficient for such a company, and it’s easy and cheap to register. It’s very common for small investors to resort to this tactics.  Then you can set about finding a reliable Chinese partner, so your company can teach in their premises. A consulting company is not legally allowed to engage in English education in China, but there is little possibility of the relevant authorities finding out what’s going on in your Chinese partners’ classes if you properly and smartly make it look like part of the Chinese partners’ regular teaching activities. As to the marketing, teaching, staff employment, you can totally do them on your own. Usually, the risk of getting caught engaging in English teaching is very low, but you will surely take the risk of cooperating with Chinese partner. So  before start such a seemingly less legal partnership, you should conduct a thorough investigation of your partner-to-be’s reliability, or you will probably in serious trouble when profit-distributing problems arise between you and the Chinese partner.     

Provided by www.PathToChina.com“”Path To China “ is an International Business Consulting Firm that provides foreign investors with business registration service in China. For business advisory service , please contact Vincent by vincent@pathtochina.com.

This entry was posted on Monday, October 15th, 2007 at 7:33 am and is filed under Joint Venture ("JV"), Wholly Foreign-Owned Enterprises ("WFOE"). You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.