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FORUM - Doing Business in China

Selling watch and jewellery

11 Mar 2006 11:31

We have a few international brands of watches and jewellery under our portfolio. We have identified a departmental store with regional presence in major cities in China.

Do we have to set an office at every city? Since there will be invoicing, our best bet is a WOFE? What are the taxeds involved?

Post 1 of 9

11 Mar 2006 14:57

Our company has the rights to sell a few international brands of watches in the AP. We are keen to go into China. We have identified a departmental chain to start in China.
How do we register our business? This departmental chain has 50 outlets throughout China. Do we register at every city or is there a centralized license?

Post 2 of 9

11 Mar 2006 14:58

(By the way, you posted this question in the wrong sub-forum, so that is why nobody is answering).
How to do it? Register one business in your city of choice, and then you can do business anywhere in China.

I wonder if you will be invoicing each individual department store? If so, then that means you will need to issue invoices to, for example, the Beijing store and also the Shanghai store. If your business is based in Shanghai, it will be a little bit of a hassle to issue the invoices for the Beijing business, as these invoices will still have to be PRINTED in the Shanghai office and then delivered to your Beijing customer (or probably first sent to your Beijing salesman who will hand deliver them to the Beijing customer).

Some companies choose to set up many branch companies all over China in order to make the invoicing process more “localized” (and to get some special VAT local policies), but I would not recommend this. It requires a load of paperwork to set up and maintain all these entities each year. So I think it is better to stick with a central invoicing organization, especially at the beginning of your new business startup. Keep things simple on the administration side so you can focus your time and energy trying to figure out how to get more consumers to buy your watches.

Hope that helps! Thomas at Innovatize

Post 3 of 9

11 Mar 2006 14:59

Thomas, thank you very much for your input. Thank you again for the wrong forum note.
Just to probe further. We actually have to hire, train and pay our own staff in these departmental stores as concessionaires, meaning we pay a percentage of our revenue for operating in their premises. It is a less costly and faster penetration rate strategy.

Therefore, if we choose not to 'localise' our operation, by only setting up in Beijing, does it run foul of their labour laws?

And also, if we centralised the invoicing, does that mean the POS terminals at all locations can be PRINTED as if it is issued from Beijing? Is it illegal?

Post 4 of 9

11 Mar 2006 17:23

Re business model: Yes, I know what you mean. We call this the "bao di" model here, i.e. guarantee a minimum income to the department store. Basically, they will make a fixed percentage profit on your sales. BUT if your sales are not high enough and therefore their monthly income from your products is not high enough, then you have to make up the difference. Your risk is that your sales at the beginning will be small so each month you will be paying this "bao di" fee. Once your sales reach a reasonable level, then this will not be a problem.

Legal: No problem to set up in Beijing and hire some sales girls in Shanghai and other cities to manage your selling spaces. This is 100% legal.

Invoicing: Actually, you will not need to have POS terminals according to my understanding. What you will do is this:
a. your sales girls will work with the consumer and get them to buy your product.
b. the consumer will then go to the department store cash counter to pay.
c. then the consumer will come back to your counter to pick up the goods.

So the sale will be booked by the department store, and THEY will issue the invoice to the consumer. At the end of the month, your local girl will get a print out of all the sales for the month from the department store (double check it), then YOU will issue an invoice to the department store for part of this amount. The difference is kept by the department store as their profit. You will issue your invoice once per month to each
department store. Your invoices will all be printed in your Beijing head office and then sent out to the sales girls to hand deliver to the individual department store finance offices (or maybe to a central finance office if the department store is organized this way…which I doubt). They need to get a dated receipt from the dept store finance office proving that they received the invoice. Then the department store will pay you
according to your credit terms (e.g. X days from the invoice delivery date).

If for some reason you are using a different model and absolutely need to issue invoices to each individual consumer yourself, then you will have to have a legal entity in each city. In fact, the law states that your invoice printing machine AND printer must be located at your legal business address. So each department store counter address would need to be registered as a separate company or as a legal branch of your main entity. Only then could each of these counters issue official invoices to consumers.

To answer your question more directly: You can not have a remote terminal printing out the invoices in a location separate from your official invoice computer (In Shanghai, the tax department sells these computers to you; not sure how they do it in Beijing). Of course, this is China so there are always special cases possible, but the above is the standard model/rules.

Post 5 of 9

13 Mar 2006 08:59

Thomas, thanks a million !

Btw, can anyone verify that VAT on watches and jewellery is 17% across the board in all cities and with import tax of 30%? Is there consumption tax invoived?

Post 6 of 9

13 Mar 2006 18:13

Import duty for watches in China range from 11 to 23%, and for jewellery 20 to 35%. Imports of all these goods are subject to 17% value added tax. For jewellery consumption tax of 5% will be levied for gold, silver and diamond jewellery, and 10% for other jewellery. No consumption tax for watches.
You may know that under CEPA, imports from Hong Kong of these goods into the mainland are free of import duty if they can meet with the Hong Kong origin criteria requirement.
Post 7 of 9

27 Dec 2012 10:06

http://www.pricescope.com/wiki/it_safe_buy_diamonds_online - here you can find a lot of information about diamonds anв jewelry and find out what goods people really need

Post 8 of 9

23 Jan 2015 10:15

Hello,
 

Are these info still valid or has there been any changes? Can you recommend any agency / service provider to help with import of jewellery (gold & diamonds) into China?

 

by Moderator - 13 Mar 2006 18:13
Import duty for watches in China range from 11 to 23%, and for jewellery 20 to 35%. Imports of all these goods are subject to 17% value added tax. For jewellery consumption tax of 5% will be levied for gold, silver and diamond jewellery, and 10% for other jewellery. No consumption tax for watches.
You may know that under CEPA, imports from Hong Kong of these goods into the mainland are free of import duty if they can meet with the Hong Kong origin criteria requirement.
Post 9 of 9
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