Afimilk has been operating in China for over 20 years. In 2004, Afimilk became one of PTL Group’s first clients, utilizing our operative infrastructure for all of its business needs. This included professional team employment, office services, logistic support and warehousing services. Afimilk’s China team eventually grew to include 20 employees, who were all employed by PTL Group.
As Afimilk’s China operations grew, so did its market opportunities – including a wide range of government projects that relied on the company’s advanced products. To leverage its success, and compete for significant tenders, Afimilk needed to establish a business entity in China – and to do so moderately and in congruence with its current activities. Along with the challenges that come with company set-up, the COVID-19 pandemic started just as the company began its registration stage.
The local entity’s registration process, which was initiated and managed by PTL Group, was going according to plan, until the team discovered that in order to participate in certain tenders, a national business entity was required – and not a local entity. This meant that the word CHINA was to be added to the WFOE’s official, instead of the name of the city in which the entity was registered.
As it turned out, making this small change required us to re-submit all of the submitted documents, while also significantly increasing the registered capital. Despite these challenges – and the COVID-19 pandemic – PTL Group’s experience staff was able to obtain a national WFOE license.
We soon faced another challenge, when Afimilk requested to add assemblies in China to their national license. Yet since Afimilk’s registered address was located in the center of the city – where assemblies were prohibited – it was not possible to change the company’s license.
To solve this, we realized that it was imperative to change the company’s address to one of Beijing’s remote neighborhoods, and turn the city center office into a branch that belongs to an Afimilk company that is located in the suburbs. Once this was accomplished, we were able to achieve our goal.
Establishing Afimilk’s WFOE took time, but since Afimilk’s ongoing operations were supported by PTL Group, there was no tight deadline. Every challenge encountered along the way was handled with utmost professionalism – and after taking every possible option into consideration.
Once the WFOE was established, all of Afimilk’s assets – from employees to funds to inventory – were transferred from PTL Group to the new WFOE in a swift and effective manner.
For over 16 years, Afimilk has relied on PTL Group’s support services without the need to set up a business entity in China. Yet when the company needed to take the next step forward, PTL Group was there to provide expert guidance. After the WFOE was up and running, PTL Group continued to manage the new entity’s operations, while providing a slew of services that ensure that the company continues to operate with utmost professionalism.
Leveraging new traffic sources and the growing interest in the ad tech field by initiating GeoEdge’s operation in China and East Asia, while integrating the company’s platform with new players in the ad tech industry.
Prior to market entry, PTL Group’s team advised GeoEdge on China’s internet and privacy regulations, thus ensuring that they are compatible with China’s unique requirements. This also saved the company the burden of obtaining an ICP and registering a local entity in China.
As it turned out, reaching and cooperating with new and potential clients was relatively simple, as their profile was similar to GeoEdge’s existing clients outside of China.
Employment of new staff was outsourced to PTL Group, and a foreign manager was relocated to Beijing to manage the Asia-Pacific office. PTL Group supported the work permit application and has since been handling the annual renewal process.
Working with PTL Group saved the company the need to establish an entity. As a result, it did not have to meet China Cyber law regulations, which include exposing IP, sharing client information and reporting to the tax office. The company was able to operate legally in China while leaving its assets, IP, client base, servers and income flow out of China.
After one year of operation in China, GeoEdge’s Chinese market value has tripled.
Working together with PTL Group has proved yet again that privately-owned startups can handle their China-out operation independently, without the need for partnering with major local investors or strategic JVs. Outsourcing business functions to an experienced and professional service provider is ideal for realizing market potential.
The company produces high-end electrical appliances with core technology that comes in large and heavy electrical boxes. Shipping the complete product to China is very costly, time and space-consuming. It would make more sense to ship the core technology to China, purchase the electric box locally, and install the core technology in China.
Without an entity in China, the company faced several obstacles. For example, it was unclear how to effectively import the core technology to China; commission installment work with a local manufacturer; sell products to distributors and end users; sign sales contracts, invoice and collect funds from local clients; repatriate funds back to the company HQ; and control the entire process in a safe and minimal-risk manner that complies with local regulations.
PTL Group’s experienced logistics team guides the company throughout the entire importation process. This includes preparing all the required documents and certifications for the importation and selling of its electronic products in China. This also includes monitoring the process of releasing the products at China customs, to ensure a smooth and quick release. After the goods are imported, they are sent either to a PTL Group warehouse or to the local manufacturer for assembly.
The assembly process:
The PTL Group team coordinates the delivery of the company’s core product to the local manufacturer, who then proceeds to assemble it in the electric box. We sign a service contract with the local manufacturer, thus ensuring the terms and conditions of the service and payment. During this time, PTL Group is still the owner of the products and assumes full responsibility for them. Once the assembly is completed and the products are ready for shipping, our logistics team coordinates the shipping of the products either back to the PTL Group warehouse or to the buyers.
The selling process:
In order to sell the company’s products, the PTL Group finance team signs sales agreements with its distributors or end users. Once the products are ready, and the payment terms are fulfilled, we will assume responsibility for delivering the finished products to the customer.
Meanwhile, our finance team follows up and monitors the payment terms throughout the process from the moment the Purchase Order is submitted. Once payment is collected, our team handles all financial issues related to the payment including issuing VAT invoices (Fapaio), payment of VAT, VAT refunds, payment of local taxes, import tariffs, etc. At the end of the process, the PTL Group team handles the complex process of transferring the funds out of China.
By outsourcing the entire supply chain activity and financial management of their projects to PTL Group, the company is able to operate in the Chinese market at full capacity – just as if they had their own company in China. Our team fulfills all of its operational needs, allowing its professional staff to focus on selling their products. Meanwhile, our team effectively monitors and handles the entire logistics and financial operation to ensure smooth client delivery, secure payments, and transfer funds to the company’s headquarters overseas. The entire operation becomes highly cost, time, and risk-efficient.
By partnering with PTL Group, the company is able to conduct the assembly activity in China and keep its IP safe and secure, by allowing the local manufacturer to perform only the necessary electrical work associated with building the electric box. The fact that we are the Import of Record and the owner of the products throughout the entire process ensures that the manufacturer has no direct contact with the company’s customers.
Blox’s basic work assumption was that Chinese companies would find its solution very useful. Therefore, it was essential to recruit a Chinese team that would focus mainly on sales and marketing. This also meant handling important HR issues such as worker employment, payment of salaries and social benefits, and expense account management. Since Blox didn’t have an entity in China, and didn’t intend to set up an entity in the near future for various reasons, they needed to find a solution that could effectively respond to these issues.
PTL Group was able to provide all the solutions that Blox needed: Employment of Blox employees in China, payment of salaries and social benefits, management of the company’s expense account, and high-level HR management – while ensuring that employee welfare complied with all necessary requirements.
PTL Group was able to share its insights and in-depth knowledge with Blox regarding optimal employee team management in China. PTL Group’s management team was always available for consultation based on Blox’s dynamic needs.
Blox was one of the first companies of its kind to operate in the Chinese market. The company’s pioneering activities had an enormous influence on market demand and on the company’s reputation as a leading international brand.
Blox was able to set up an operational team in China with utmost quickness and with minimal costs, while maintaining full control and transperancy over the activity of its team in China and without the need for setting up a legal entity in China.
The experience and knowledge accumulated by PTL Group throughout its work with diverse clients was crucial to its success in China.
While Blox is a western undertaking, the company entered China with a wealth of vital knowledge and a true market commitment, which are exemplified in its large China-based team and long-term vision. This complements the rise of the blockchain field in China, which has been identified by the Chinese government as having strategic importance.
In 2006, the company established its WFOE and manufacturing facility in China, which operated independently with limited supervision from its headquarters. After more than seven years of operation, the company requested an operational audit for insight into its WFOE’s performance, especially in areas of finance and operational risk control.
The investigation was conducted by PTL Group’s audit team, which consists of specialists from admin, HR, logistics, trading and finance. The following critical facts and risks were uncovered:
The company understood that the issues uncovered in the operational audit can potentially jeopardize the company’s sustainable development. Company management agreed to the audit team’s suggestions regarding organizational restructuring, process definition and documentation, the establishment of a financial approval system, supervision and quality management improvement and the establishment of diverse internal control mechanisms.
In 2005, PEP Filters started to sell a product in China through a Singaporean distributor. The product, which was manufactured in the United States, faced strong competition in the Chinese market. There were great distribution difficulties throughout Asia due to a long lead-time, no technological advantages, lack of control and high price.
With PTL Group’s support, the following changes were implemented:
In addition, PTL Group took responsibility for bonded and front warehousing, financial planning, site operations management, establishment of legal entities, invoicing & collection facilitation, insurance and ERP.
A significant cost reduction in bill of materials and lead-time, as well as a reduction in global cost, helped significantly improve penetration rate in China. These results were accomplished with one foreign engineer, one local engineer, two temporary assembly workers and one sales manager. The PTL Group team managed all support operations for Pep Filters.
Establishing the initial sales structure and training facilities for John Bryce Training in the Chinese market.
Facilitating local education licenses and VAT invoicing services, which are a key requirement for large clients and state-owned organizations.
In 2007 John Bryce Training entered the market using PTL Group’s infrastructure. PTL Group recruited the GM, the sales team and the initial trainers, while also providing a shared office space in Shanghai and Beijing, as well as classrooms for the training sessions.
As a result, John Bryce Training’s GM and sales team were able to focus more on business development, while the PTL Group team provided facility management and handled HR and financial aspects. When the sales team sold a course to a local customer, PTL Group would sign a service agreement with the customer, collect payment for the course and issue a formal VAT invoice.
Later, PTL Group’s marketing team provided marketing support for a period of two years, thus laying the foundations for the company’s marketing database and branding.
John Bryce Training focused on the key functions of its business, while PTL Group provided the infrastructure and facilitated the hard-to-get education license and invoicing capabilities. This collaboration also allowed John Bryce Training to reduce numerous HR and commercial risks.
As a Rep. Office, the company could not sell locally in China and needed a reliable partner to execute its entire logistics process. Still years later as a WFOE, the company needed a reliable logistics partner, as they faced enormous difficulties regarding the import of their goods into China.
PTL Group was able to use its experience and relationships to import the company’s goods (despite strict restrictions for this line of products), store the goods in its warehouse in Shanghai, sign sales contracts with local clients, collect client payments, issue local VAT invoices and transfer the money back to the company’s HQ.
Even later, after establishing its own WFOE, the company elected to continue using PTL Group’s warehousing and distribution services (in both bonded and non-bonded warehouses) to manage their stock, while using its WFOE as the importer and seller of goods.
Using PTL Group services, the company’s team in China was able to increase their sales due to a competitive advantage gained by the shorter lead time and the ability to sell products in local currency. The company benefited from full transparency pertaining to supply chain control – from home country to end user.
The company’s business results allowed it to grow large enough to justify the establishment of a WFOE. At the same time, the company elected to rely on PTL Group’s provided services so that they could continue to efficiently manage their remote team in China while focusing on their core business.
Being one of the first companies to offer Chinese advertisers the opportunity to optimize their marketing efforts in foreign markets. This includes setting up a branch in China, hiring employees, creating a pipeline, and forming a strong brand in China. The goal was to build a large Chinese customer base, and to concentrate efforts in the China-out market by highlighting relevant advantages.
In 2016 the company made its first steps in the Chinese market, with the help of PTL Group and its diverse services.
In order to enable the company’s operation in China, PTL Group recruited local professionals. These included developers, a sales team and account managers. They were able to assist both Chinese advertisers and app developers looking for opportunities in the global market and to bridge between them and their foreign counterparts. In addition, PTL Group also provided the staff with a shared office space. Marketing support was also provided, as PTL Group managed the company’s official WeChat account.
Using PTL Group’s expertise allowed the company to enjoy the benefits that are normally reserved for well-established companies, as opposed to younger business entities.
Minimal resources were invested, but much was generated in return:
The company entered the Chinese market in 2015, without a former local presence and without much success. Therefore, the goal was to establish the first successful Chinese market sales team.
In 2017, the company contacted PTL Group after realizing that a change is needed in order to increase sales. As a result, the company started to employ local salespersons by relying on PTL Group’s HR & employment infrastructure.
Some of the required staff had already worked in the mobile advertising industry. They were familiar with this specific professional field and therefore could start generating sales immediately.
The PTL platform provides the company with an option to quickly fold up their business in China within 1-2 months, if and when they see fit to do so. If they had their own company in China, this may take 1-2 years.
The company currently employs 5 salespeople in China, who are an integral part of the company and have also visited its central HQ several times.
According to the company’s finance manager, entering the Chinese market with PTL Group as a service provider is ideal, especially for startups. The rationale is simple: when a local employee is outsourced, risk exposure is minimal. For a startup company that wishes to shorten its time-to-market, but also withdraw quickly (if necessary), this is a very good deal.
The company had already been selling its products for a few years in China through a sales representative. In fact, the company was one of the main suppliers for a large organization in China, which requested them to start manufacturing locally in order to reduce their manufacturing costs.
As a partner in the Changzhou Industrial Incubation Initiative (CI3), PTL Group offered the company a space of 1,000 sqm in the incubator building (13,000 sqm). PTL Group also managed the entire assembly plant establishment process.
After the space was ready, the PTL/CI3 team assisted the company in recruiting major production line positions, the GM and QC managers, as well as in managing the entire production license and GE vendor certification obtainment process.
PTL Group also helped the company with local purchases, machinery installations and the importing of components, tools and machinery. This while managing all HR, financial and logistics issues, as well.
Since the 1990s, the company had been selling its products in China through a distributor. In 2008, in order to penetrate the Chinese market, the company started selling directly in China by hiring a Sales Manager recruited and hosted by PTL Group. After facing product distribution difficulties, the Sales Manager assessed that the competitors were manufacturing directly in China and therefore were able to sell their products at a much cheaper price. Moreover, the company’s import licenses had to be renewed but the renewal of the CFDA license, which is required for imports, had been rejected.
PTL Group dedicated a space for the company’s factory within its incubation facilities (1000 sqm). PTL Group managed the entire process of set up, import of machinery, installations and the company’s WFOE registration so they could apply for all the required licenses.
PTL Group was able to assist the company in establishing its own local manufacturing entity while obtaining an CFDA license and all other necessary licenses required for product manufacturing and sales.
The factory quickly moved into full production and is now selling locally made products, having overcome regulatory obstacles and evenly coping with the local competition.
AVT had established a subsidiary in Northern China, in order to enjoy tax benefits offered by the region. Yet over the years, it seemed that the company suffered some financial difficulties regarding said tax benefits.
PTL Group commissioned a financial expert to conduct a complete financial audit in order to map the company’s complete financial and tax situation, and to review alternative options.
The audit results clearly showed that there was no financial justification to keep the company in its location. The results showed that the company would be better off shutting down operations in that location and seeking a better place.
PTL Group’s financial experts took over AVT’s financial process management for the following months, in order to perform company liquidation in the most efficient, legit and reasonable way possible.
PTL Group was able to clear all accounts payable and accounts receivable issues, close bank loans, submit employee termination plans, clear all tax issues, and facilitate the release of AVT from its liabilities in China without any complications.
After PTL Group managed the company’s factory setup in China, the company needed a purchasing professional to buy the vitamins required for production. At the same time, the parent company who up until then had already recruited a purchasing employee in China, was suddenly notified that this person had resigned.
One of PTL Group’s skilled managers fulfilled company’s purchasing management tasks. The work required in-depth knowledge of the chemical industry, which the PTL Group Manager acquired with the support of PTL Group’s logistics and administrative teams.
PTL Group’s dedicated manager became an expert in purchasing the ingredients required and continued to do so for the next few years. The manager quickly became completely occupied with the company’s purchasing needs, and as a result PTL Group, the manager and the company all decided that it would make sense for the manager to become an employee of the company.
The company established a local WFOE to run design and sourcing activities in China. Two years later, a new GM was sent from Australia to manage the company’s operations – but he had no experience in running a company in China.
When the accounting firm declared that VAT refund cannot be claimed, the GM requested that PTL Group perform an Operational Audit to help sort out VAT matters, as well as other issues.
The Operational Audit revealed that the entire bookkeeping records were wrong. In addition, the warehouse records were wrong and could be changed manually by the WH keeper. Moreover, the employment contracts were not in place. Many other small problems were discovered. VAT refunds could be claimed, yet since bookkeeping was so poor, providing the required evidence was a hard task.
PTL Group’s professional team took over the company’s bookkeeping, HR and accounting.
VAT refund was successfully received (1/2 million RMB).