Jan. 17 – Foreign-invested commercial enterprises, commonly known as FICE, are fast becoming an ideal way for foreign investors to enter China’s Mainland market. Previously, foreign companies could only form trading companies on their own if they registered in the country’s Free Trade Zones. However, as part of China’s WTO commitment to let foreign-invested enterprises exercise trading and distribution rights, starting from December 11, 2004, foreign investors have been allowed to set up FICE in the country to conduct wholesale, retail, and other permitted businesses.
Definition of FICE
A FICE refers to an enterprise with foreign investment that engages in the following business activities:
- Commission agency: Sales of goods as an agent, broker, auctioneer or sales of others’ goods as a wholesaler through collection of fees on a contractual basis; and the related ancillary services thereof.
- Wholesale: Sales of goods to retailers, consumers from industry, trade and organizations, or to other wholesalers; and the related ancillary services thereof.
- Retail: Sales of goods to individuals or groups in fixed places or through television, telephone, mail order, Internet, or vending machines; and the related ancillary services thereof.
- Franchising: Authorization of the use of its trademark, trade name and operational mode through signing of contracts for the purpose of getting remuneration or franchise fees.
“Given that the spotlight is really on the growth of the China consumer market at the moment, our experience is that in the last couple of years we’ve seeing a large influx of foreign investors investing via a FICE structure in China,” comments Cory Lam, senior business development associate at Dezan Shira & Associates. “This is particularly apparent around the Yangtze River Delta region where many companies are looking to bring their high-end Western brands to the growing retail markets of Shanghai, Hangzhou, and Suzhou.”
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