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China Company Registration is complex because of the country's bureaucracy and legal framework.
However, China has been attracting many foreign investors due to its quickly-developing economy and infrastructure, and is currently ranked as the world's 3rd largest economy in the world (after the USA and EU).
China company registration process usually proceeds as follows:
- Pre-approval of the business name is obtained at the local municipal bureau in the city where the business - will maintain a physical premises
- Obtaining foreign investment approval from the provincial Foreign Economic Relations & Trade Commission
- Opening a bank account in the intended business name to accept paid-up registered capital
- Obtaining a Certificate of Registration for the business
- Obtaining approval to make a company seal
- Obtaining the company code certificate
- Registering the business with the Statistical Department in the city where it will open its physical office premises
- Registering the business with the Tax Bureau in the city where it will open its physical office premises
- Setting up a corporate bank account to conduct daily transactions
- Applying for authorisation to print or purchase financial invoices/receipts
- Buying financial invoices
- Registering with the Social Welfare Insurance Center in the city where the business will open its physical office premises.
China is now the world's single largest recipient of foreign direct investments (FDI) among developing countries. This is a key reason why many foreign investors choose to set up a company in China. In some provinces, incorporating a China business entity has become increasingly popular due to favorable local economic conditions.
1.Since its accession to the World Trade Organisation (WTO) in 2001, China has made considerable legal and regulatory progress. In short, investors starting a business in China now receive improved protection for intellectual property rights. Increasing numbers of investors are being encouraged to begin setting up a company in China.
2.When starting a business in China, note that a China company is the perfect gateway into China, particularly when supported with a China Virtual Office.
3.100% foreign ownership is permitted for a Foreign-Invested Commercial Enterprise (FICE) and a Wholly-Owned Foreign Enterprise (WOFE).
4.Tax exemptions are available to form a company in China, for example a manufacturing FICE has a low corporate tax rate of 10% in certain circumstances.
5.China signed double taxation treaties with several countries, offering tax exemptions to entrepreneurs planning to form a company in China.
Bureaucracy
China is still a developing market and despite the great economic and regulatory strides it has made in recent years, China company registration process remains complex and time-consuming.
Intellectual Property Rights
A key concern when starting a business in China is the protection of Intellectual Property Rights (IPR). Under the terms of its accession to the WTO in 2001, China is a signatory to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. However, concerns remain among those who have started up a company in China or those planning on starting a business in China about the effective enforcement of IPR protection laws in the country.
Capital Requirements
A China WOFE and FICE must inject a minimum 20% of the paid up capital of RMB30,000 (US$4,175) into a corporate bank account prior to China company registration process. The 80% balance is injected into the account in installments within two years of incorporation. Thus, to form a company in China, a substantial initial capital is required.
Representative Office
A Representative Office cannot invoice clients in China directly, and can only conduct market research on behalf of its parent company.
