China Company Registration

Registering a Business in China isn’t complicated…

 

In many ways, registering a business in China has become easier over the years. Gone are the mandatory minimum capital injection requirements for registering a business in China and the number of licenses required to begin operation have been reduced. Nevertheless, there are many important considerations to be made when registering your business in China.

Integra Group provides assistance at each stage from selecting the right legal entity and tax status to post- setup procedures such as opening bank accounts and obtaining special licenses. To speed things up, we pre-screen all documents and application details to ensure you can get on with your business as quickly as possible.

 

 

Type of Business Structures

Choosing the right business structure is of paramount importance to your business. The selection should be done according to a variety of factors including; nature of business activity, size of the investment, industry, and goals of the shareholders. Integra Group provides advisory on selecting the right business structure best suited to your needs.

WFOE

A Wholly Foreign-Owned Enterprise (WFOE) is the most common legal entity type in China and is is suitable for most forms of business ventures. According to the Catalogue of Industries for Guiding Foreign Investment, foreign investment in China falls into three categories: Encouraged, Restricted, and Prohibited.

Encouraged – Consulting, Manufacturing, Trading, etc.
Restricted – Telecommunications, Exploration of natural resources, Railway, etc.
Prohibited – Domestic freight, Tobacco, Radio & TV programs, etc.

Note: Free-trade-zones are not subject to the Catalogue of Industries for Guiding Foreign Investment and can therefore often provide access to otherwise restricted or prohibited industries unless explicitly stated by the free-trade-zone.

Characteristics of a WFOE

 Ownership can only be non-Chinese individuals or corporations
 Can earn profits in China
 Can issue legal VAT invoices (fapiao) to clients
 Can send money overseas in accordance with SAFE
 Can hire local and expatriate staff
 Can hold intellectual property rights

Joint Venture

There are two forms of joint ventures in China: Equity joint ventures (EJV) and Co-operative Joint Ventures (CJV).

Equity Joint ventures are new legal entities with shared ownership between two or more parties who share risk and return equal to their share of ownership . They are a good option for partnerships where a local partner offers strategic advantages to the business venture in China. EJV’s can sometimes provide access to restricted industries as outlined by the Catalogue of Industries for Guiding Foreign Investment if a controlling share is owned by a local individual or company.

Co-operative Joint Ventures are new legal entities with shared ownership between two or more parties whose profits are distributed according to the terms of a contract – as opposed to the share of capital contribution – allowing for more structural flexibility over an equity joint venture.

 

Representative Office

A representative office (RO) is a liaising organization of a mother company located inside China or outside of China. Representative Offices are unique in the way that they cannot engage in “profit-making activity” or issue official VAT invoices (fapiao) to clients. Their use is often to establish a connection to China, rendering advice, displaying products and services, conduct research or liaise with business partners.

Branch Office

A branch office is an office belonging to another company in a different jurisdiction. It is not a separate legal entity, thus, it is limited to the scope of its main office but allows the business to expand geographically and hire local staff where a branch office is located. Branch offices must pay tax locally and comply with the regulations in the jurisdiction in which it is located.

Branch offices do not need to receive approval from the Ministry of Commerce and thus can be set up quicker than a conventional WFOE.

 

 

Business Registration Process

Integra removes all the complexities of registering your business in China. We help you prepare all the necessary documents to ensure your applications proceeds smoothly. We can also assist in registering a business in a Free-Trade Zone for businesses that meet the requirements. Contact us for more information on business registration in Free-Trade Zones in China.

 

 

Step 1: Pre-registration preparation

Important: All businesses in China are required to designate a supervisor and responsible finance person certified by real name authentication. The supervisor and responsible finance person cannot also be the executive director or the legal representative. If required, Integra can act as your supervisor and designated finance person on the basis of a Know-Your-Client (KYC) relationship.

During the pre- registration, we will help you select a Chinese name for your new business as well as draft all the necessary documents necessary for the application. Documents required vary depending on the legal entity type and the shareholders involved. We pre-screen all documents and application details to ensure you can get on with your business as quickly as possible.

For a detailed list of documents required, please contact us for a free consultation.

 

Step 2: Application Process

Registering a business happens in two phases. First, the business scope must be approved by the Ministry of Commerce and then the State Administration of Industry & Commerce issues the business license.  From start to finish, registering a business in China takes roughly 5 weeks.

Note: Although the business is now registered, it cannot yet make or receive payment, hire employees, file its taxes, or issue VAT invoices (fapiaos).

 

Step 3: Post-registration procedures

Once the business license has been obtained, Integra will help you complete the following procedures:

 Carving the company seal (aka. Chop / Chomp)
 Opening company bank account
 Registering with the tax authorities
 Registering with the social security bureau
 Registration with the customs authorities (if applicable)
 Obtaining special licenses (if applicable)
 Application for an Alien Employment Permit (if applicable)

In addition to business registration, completing all of the necessary procedure above takes between 2-6 weeks, depending on the tax registration status and other factors. Once completed, the business can commence its operations, including; hiring employees, making and receiving payments, issuing invoices, etc.

Note: Special licenses and Alien Employment Permit can take more than 6 weeks to obtain.

 

Step 4: Monthly, Quarterly and Annual Compliance

All businesses in China are required to meet monthly, quarterly, and annual compliance requirements, regardless of if they had any turnover. Integra Group provides flexible bookkeeping and compliance services to help you meet all your compliance requirements.

 

Frequently Asked Questions

Whats is a fapiao?

A fapiao is an official state issued VAT invoice that serves as proof of purchase of goods or services in China. All business expenses incurred by the business must be accompanied by an official VAT fapiao. Fapiaos are issued via a government issued fapiao printer or by visiting the local tax bureau.

Can i obtain a working visa as the owner of a WFOE?

Yes, as long as you meet the requirements for employment in China and hire yourself as an employee.

Do I need to be physically present to register a business in China?

Yes and no. Integra can act as an agent on your behalf to register your business and obtain the business license. However, you must be physical present in order to open a bank account in China.

Do I need an office in order to register a business in China?

Yes. You are required to provide a valid office address and rental agreements in order to obtain a business license. Integra can assist in finding virtual office space in order to quickly get your business up and running. Contact us for more information.

How can I repatriate funds back to my home company?

There are multiple ways to repatriate funds back to your home country including: service agreements, dividend payments, and decreasing registered capital. However, payments must be in accordance to State Administration of Foreign Exchange (SAFE). Consult with your accountant on the safest way to move funds back to your home country.

Can I convert a RO to a WFOE at a later date?

No. You must create a new WFOE and move all resources to the new legal entity and then de-register the RO.

Got a Question?

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