Danny Chan, BAX Global's managing director Hong Kong and southern China says that with Cepa status, companies can set up WFOEs on the mainland

US based logistics company Bax Global is planning to expand significantly in the Chinese mainland after recently obtaining its Cepa licence to operate a Wholly-Foreign Owned Enterprise (WFOE).

Danny Chan, BAX Global's managing director Hong Kong and southern China, said as a WFOE, the logistics provider is able to provide a comprehensive range of transportation and supply chain management services to better support its growing customer base in the mainland.

"From a practical point of view this includes activities such as booking space directly with ocean carriers and air carriers, issuing invoices to and accepting payments directly from customers, and rolling out new branches in the mainland in the near future," he said.

Without the Closer Economic Partnership Arrangement or Cepa status foreign logistics providers have to either manage with joint ventures or representative offices before they are allowed to set up their WFOEs under World Trade Organisation (WTO) agreements.

Cepa advantages

Mr Chan said: "Cepa provides two major advantages. First, it enables Hong Kong-based foreign companies to set up a WFOE in the mainland one or two years (depending on the type of industry the business is in) earlier than WTO commitments. Secondly, Cepa allows Hong Kong-based companies to open their branches once they have fully injected the registered capital while under WTO arrangement, foreign companies will have to wait one year after the WFOE is set up before they can open branches in China."

Bax Global has formed new subsidiaries in Guangzhou and Shanghai to coordinate the development of its rapidly expanding network throughout the mainland. The network provides transportation and supply chain management services for its customers especially in selected industries such as hi-tech, electronics, medical, healthcare, retail, fashion and aerospace.

"We will soon roll out branch licences in other major sea ports and airport cities in the mainland. China is an important market and production base for today's global economy. As a fully licensed logistics provider, BAX Global is positioned for growth," added Mr Chan.

BAX Global Inc with worldwide headquarters in Irvine, California, is a US$ 2 billion supply chain management and transportation solutions company. It has a global network of nearly 500 offices in 133 offices.

Over 660 Hong Kong-registered enterprises have been issued with Hong Kong Service Supplier Certificates under Cepa. Some enterprises in sectors like banking, distribution, transport and logistics, have already set up operations on the mainland. (Details in Cepa brings positive economic impact)

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