Mandatory Fund Contribution
In China, there are items that need to be calculated and presented in the accounts as mandatory fund contribution before your annual audit and tax settlement can be finalized. These include amounts to the companies "enterprise expansion fund", the "reserve fund" and "staff & workers welfare and bonus fund". The amounts allocated to each will be specified in the company Articles of Association. Interestingly, although it is mandatory for the company to provide a percentage of turnover to these three funds, no minimum level of contribution has in fact been identified. Negotiations at the application stage with the local authorities are therefore important.

Above Bottom-line Distributions
Above the bottom-line distributions are expenses charged to your China operations, usually by the foreign parent directly. They are legitimate fees, for which an invoice is presented to the China business as part of its normal operational procedure. These can include:
2.1) Royalty charges for trademarks or patents owned by the parent;
2.2) "Foreign Management Expertise" - full expenses and pay for any head office overseas personnel visiting China, even if just for a short period;
2.3) Royalty fees for technology transfers;
2.4) Interest on loans, including penalties for late payment.

These need to be agreed upon and identified in the Articles prior to submission to the authorities for your China operation's business license approval. When levying such charges onto your China business, you need to be aware that such payments are subject to withholding tax (amounts vary dependent upon the service), prior to your China entity being able to remit back to the foreign parent.

Transfer Pricing
"Fees, Pay Prices and Expenses must be charged within a group at rates similar to those charged or paid in transactions between independent enterprises". If the local tax bureau believe this not to be the case, they can re-adjust charges by reference to normal charge rates or prices suiting the profitability of the China business. In other words - don't be excessively greedy. It may be an idea to pre-identify the real administration costs in conducting sales between your foreign parent and your China operations, as these are a real cost - it will help if you are able to demonstrate immediately these operational expenses if asked by the tax bureau to justify your transfer pricing strategy. 

Re-Lending Dividends
In China, interest paid on borrowings is tax-deductible. This is useful as part of an overall, longer term financing strategy for your China operations as it means you may identify the intended distribution of any profit, then re-lend back to your China operation with interest.

Re-Investment Incentives 
Such incentives are applicable when your profit remains in China. Thus you can't repatriate the money then re-invest. Re-investment must also remain in the business for five years. Incentives available include tax refunds on taxes paid (if you are in a tax holiday situation you should wait until this has expired, as there would be no refund to make), and can be as high as 40% of the total Foreign Enterprise Income Tax paid, and under some circumstances (Hi-Tech, Total Export, or Special Treatment Operations) to 100% of profits tax paid. Such refund mechanisms need to be built into your Articles of association (you don't have to commit to re-investments, but you should have the necessary structure in place in the Articles to allow you to do so and obtain the benefits if you wish to follow this course at a later stage).