The company is operating on Russia market for heating, water supply and water purification equipment since 1992.Originally established as a trading company we have a wide network of 17 wholesale centers and warehouses spread across the entire territory of Russia, as well as a retails network of 32 outlets.
Impulse Group has developed further to include a number of internet projects (www.termoclub.ru; www.heatshop.ru), a publishing house (www.aqua-therm.ru) and several production facilities, including a pressure tank factory (www.wester-heating.ru), a PPR-tanks factory (www.aquatec.ru) and a few smaller workshops.
Last year they have opened an office in USA and now they are in the final stages of registering RO in China Mainland.
Total number of employees at Impulse Group of Companies is over 800.
1.2 Customer plans
Impulse intends to open a factory in China.
They have been trading with China for over 10 years now so Impulse is familiar with the complexities of the regulations and business-activities.
Impulse will need a wide range of supporting services at different stages of the project.
At the preliminary stage Impulse require consulting on a range of topics, both tax-related and general government regulations-related.
1.3 Customer initial requirements (Provided by Impulse)
1) The investment regulations by Chinese government
2) The review of Chinese regions
3) The federal land legislation
4) Regional land legislation
5) Registering the firm (types, procedures, documents involved)
6) Acquisition of land area
7) Acquisition (building) of buildings and constructions
8) Factory building (permits, licenses, granting bodies)
9) Enterprises activities(taxation regulations, accounting and bookkeeping requirements, required permits)
10) Salary (labour legislation)
11) Preparation of feasibility report for factory building
1.4 Advisory commission
Commissioned by Impulse Group, Goldstone Consulting will carry out the consultation of setting up factory in China, as their planning, investment and management of reference and basis.
2. Plan on consulting projects (Provided by Impulse)
2.1 Basic background of Chinese factory
2.1.1 Product for manufacturing
Steel pressure tanks with EPDM membrane for heating and water supply systems
2.1.2 Raw materials to be used in production and its country of origin
1) metals of various grades (domestic, possible imported, but unlikely),
2) metal accessories (domestic)
3) rubber accessories (domestic)
4) rubber compounds – EPDM, Butyl (likely to be imported)
5) painting powder (likely to be imported)
6) lubricating fluids (domestic)
7) corrugated packaging = plastic (domestic)
2.1.3 Technological processes to be involved in production and machinery’s country of origin
1) metal stamping (steel) – imported machine
2) metal treatment
3) electric arc-welding – imported machine
4) contact welding
5) powder painting – imported machine
2.1.4 Land demand
1) At least 5 hectares of land
2) Necessary requirement: plenty of room for expansion
2.1.5 Factory building area
1) Initially 10’000-15’000sq.m.
2) Necessary requirement: plenty of resources for expansion (land/electricity supply/other)
2.1.6 Preferred ownership structure of land/factory building
Purchased, NOT rented
2.1.7 Number of employees
30-70
2.1.8 The number of foreign employees
3-4
2.1.9 Proposed investment
5 million USD over 3 years.
2.1.10 Sources of funding
Foreign capital
2.1.11 Enterprise ownership structure
WOFE,
Unlikely Joint Venture with a local business
2.1.12 Target markets
Domestic
Abroad
2.1.13 Estimated revenue
After reaching production volume of at least 10 million Euro/year the expected profitability is 15/20%, i.e. 1.5-2 million Euro annually
2.1.14 Other
R&D may be included if considerable tax breaks are available. Need clarification from your side
2.2 Areas for the research
(Evaluation of this part by Goldstone: This is only a framework, all-inclusive, chaos, unfocused, not practical. Goldstone need a realistic plan, meet the requirements of the current stage. The existing plan is a waste of time and cost, but much content has nothing to do with this project.)
2.2.1 The investment regulations by Chinese government
1) investment laws and regulations
2) foreign investors treatment
3) guarantees and responsibilities of the State to the investors
4) restrictions to foreign investments and permitted type of activity/business scope
5) the investors’ rights and responsibilities
6) state control over the investors and methods of control
7) the reasons and methods of taking away the rights to business and property from the foreign investor by the State
8) the right to intellectual property and its protection by the state
9) list of the special industrial areas (with additional government support)
10) investors’ tax exemptions, custom duties on imported equipment, land’s purchase, the real estate, export of the products
11) tax laws
12) terms and procedures involved in buying real estate property in special areas/zones
13) conditions for receiving quotas for energy- carriers (electrical power, gas, water, heat) in special areas
2.2.2 The review of Chinese regions
1) Availability of industrial areas
2) availability of energy supply
3) availability of roads
4) distance from seaports with customs terminals
5) cost of the industrial land
6) cost of industrial buildings
7) availability of workers
8) privileges of the investors on regional level (esp foreign investors)
9) restrictions to investors
2.2.3 The federal land legislation
1) classification of the lands according to intended use
2) possibility of changing the registered intended use
3) Who has a right to own land? (both physical and legal entities)
4) possible rights for the use of land (property, rent, other)
5) list of documents that confirm ownership of the land.
6) structure of the land-governing bodies – decision-making levels (who has a right to make which decisions?)
7) procedures involved in land a) purchase b) rent
8) Restrictions to the foreign investors for land purchase/rent
9) registrations procedure (which documents must be prepared/obtained)
2.2.4 Regional land legislations
Paragraph 3 applied to regional legislation in the selected provinces
2.2.5 Registering the firm
1) existing legal forms of the companies and their main difference
2) possible ownership structure
3) taxation of different forms of the companies
4) which forms of companies are allowed to engage in foreign economic activities
5) licensing requirements involved in different business activities (trade, manufacturing, etc)
6) Registering of the companies – process description, documents required, other requirements
7) Minimal legal wage for the factory workers
2.2.6 Acquisition of land area
1) Regulations towards non-resident of China purchasing the land – restrictions and requirements
2) Restrictions to quantity and type of land purchased byt non-residents
3) Land type, suitable to be used for manufacturing plant set-up
4) Guarantees of the State and regional authorities given to the land owners
5) Acts and decrees that permit land purchase. Which bodies are authorized to grant them?
6) Procedure of land purchase and registration, documents involved
2.2.7 Acquisition (building) of buildings and constructions
1) existing property rights to the real estate
2) procedure for obtaining license for building constructions for non-residents.
3) Restrictions to the height (number of floors) of industrial buildings
4) Procedure for purchase and registration of the buildings. Documents required.
5) State’s guarantees to the owners of real estate – which protection does the government give to the land/real estate owners
2.2.8 Factory’s building
1) necessary permits and licences
2) Procedures involved in their obtaining
3) Government authorities responsible for granting permissions and licences, their structure and documents required.
4) Governement authorities responsible for supervising company’s activities, their structure
5) Monitoring of the designing enterprises
6) Full report outlining the project and design companies available, which licenses do they need to have, which parts of the project can they prepare
7) Project documents required to receive all authorizations
8) Authorizing institutions, their structure
9) What is the procedure for receiving building authorization, Who makes the final decision, which approvals do we need to secure?
10) monitoring of constructing and installing bodies
11) Companies available for contracting the construction and installment, which certificates do they need to have, how do they charge.
2.2.9 Enterprises’ activities
1) Tax regulations
2) Which international conventions does China support that may influence rights and responsibilities of the foreign investors?
3) Accounting and book-keeping regulations
4) Requirements for obtaining permits for attracting forein workers
5) Time period for which business activity licenses and production certificates are given
6) Requirements for trade unions creation
7) Regulations and procedure involved in purchasing equipment and raw materials from abroad
8) Foreign trade activities regulations
9) What punishment can be given by the governemnt for improper use of land/permissions/etc? What other actions of land-owners/investors can be punished by the government?
10) What is the punishment/penalty in each case?
2.2.10 Salary
1) Salary review in selected provinces (for different types of jobs)
2) Salary payment methods
3) Labour legislation
4) Regulations regarding grants, bonuses and requirements for benefits payments
2.2.11 Raw materials
1) metal cost (steel, PPR)
2) Electric power cost and used power calculation method
3) Water cost and used water calculation method
4) Recycling of waste products and processed materials cost
2.2.12 Preparation of feasibility report for factory building
1) Feasibility report content (according to the regulations)
2) Required form of feasibility report
3) Which government authorities approve feasibility reports. What is the structure of these authorities?
3. Plan on consulting projects (Provided by Goldstone)
3.1 Preliminary plans to set up factory (Basic information on factory)
(Explanation: need Impulse to complete these questions, the information provided is not enough. Part of this is the premise of the consulting project, Goldstone carried out under these conditions.)
3.1.1 What products manufacturing?
3.1.2 Land area?
Factory building area?
3.1.3 Purchase of land to build factory?
Rent land to build factory?
Rent factory building? Requirements of the factory building?
3.1.4 Equipment sources?
Equipment investment quota?
3.1.5 Land investment quota?
3.1.6 How many employees?
The number of foreign employees?
3.1.7 The total investment amount?
Sources of funding?
Loan demand?
3.1.8 Joint venture scheme?
3.1.9 Opening Plant scheduling?
3.1.10 Target customers?
3.1.11 Sources of raw materials (Import, China)?
3.1.12 Source of Technology?
3.1.13 Product sales (China, Export)?
3.1.14 Annual revenue?
3.1.15 Chinese partner resources?
3.1.16 Other special information?
3.2 The specific requirements of factory (Requirements of the region)
(Explanation: need Impulse to complete these questions, the information provided is not enough. Part of this is the premise of the consulting project, Goldstone carried out under these conditions.)
3.2.1 Climate?
3.2.2 Traffic (Highway, Railway, Port, Airport)?
3.2.3 Economic conditions?
3.2.4 Industrial base and industrial agglomeration?
3.2.5 Upstream and downstream industries?
3.2.6 Supporting industries?
3.2.7 Technical support?
3.2.8 Labor conditions? Labor costs?
3.2.9 Energy demand (Electricity, Industrial gas, heating)?
3.2.10 Water requirements?
3.2.11 Air Quality?
3.2.12 Pollution of the environment?
3.2.13 Noise?
3.2.14 Waste Disposal?
3.2.15 Wastewater Treatment?
3.2.16 Hazardous Chemicals?
3.2.17 Fire protection requirements
3.2.18 Logistics and warehousing?
3.2.19 Tax incentives required?
3.2.20 Other special policy needs?
3.2.21 Foreign employees living requirements
（Live, Religion, Diet, Medical, Children’s education, Traffic）?
3.2.22 Other special requirements?
3.3 Suggestion of factory site
(Explanation: This part of our proposal on the site, based on the first two parts. Through research, Goldstone gives Impulse recommendations on Impulser’s factory in China and comparative analysis of site)
3.3.1 Standard of Location’s choose
3.3.2 Location screening
3.3.3 Location comparison
3.3.4 Location recommendation
3.4 Planning of factory setting up
(Explanation: When Impulse determines the location of the factory in China, Goldstone will provide Impulse the following planning. These programs are on investment and construction of China plant.)
3.4.1 Policies and regulations
3.4.2 The overall process and time
3.4.3 Production technology program
3.4.4 Plant construction program
3.4.5 Human resource planning
3.4.6 Financial Plan
3.4.7 Business plan
3.4.8 Other programs
3.5 Proxy of factory setting up (To be determined.)
(Explanation: This part is agency services what Goldstone can provide, in the process of investment and construction of China plant.)
3.6 Other related reports
(Explanation: These are some of the reports needs to be done, in the process of investment and construction of China plant.)
3.6.1 Investment model demonstration
3.6.2 Feasibility Study Report
3.6.3 Environmental Impact Assessment
3.6.4 Energy Analysis
3.6.5 Other reports
4. Time and budget
The project consists of the following six components.
A. Preliminary plans to set up factory (completed by the Impulse)
B. The specific requirements of factory (completed by the Impulse)
C. Suggestion of factory site (completed by the Goldstone, about one month, about RMB 100,000 yuan)
D. Planning of factory setting up (completed by the Goldstone, about one month, about RMB 100,000 yuan)
E. Proxy of factory setting up (completed by the Goldstone, time and cost to be determined.)
F. Other related reports (completed by the Goldstone, time and cost to be determined.)
