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China Company Registration

The Simple Way for China Company Registration

How to expand your business to China by setting up Wholly Foreign-Owned Enterprise

China is, without doubt, a global economic hub and the second-largest market in the world. Starting in the late 1970s, China began experiencing exponential economic growth, making it an ideal destination for businesses looking to expand and invest globally.

First, however, you need to follow the correct steps for fast China company registration to take advantage of this investment opportunity.

 

China Company Registration

What are the Benefits of Registering a Company in China?

Let’s take a look at the details of registering a company in China. You may find that there are benefits to taking your business to China. Here are some of the main advantages:

 

    • Almost all Fortune 500 firms, from Apple to Nokia and Tesla, have their operations based in China. China is a rapidly growing economy that is attractive to top brands. If major fortune 500 companies have found success in China, your company can too
    • If successful multinational companies have set up a base in China, it means that your enterprise will likely be successful as well if you follow in their footsteps.
    • China has many positives that work toward starting a business in China for success. With its 1.4 billion people, your business is assured of a ready and thriving market. Furthermore, China is strategically located in Asia, so you can easily access markets in Asian countries such as India, Japan, Thailand, Cambodia, Singapore, and others.
    • Rated the fastest growing economy in 2022 globally, China is still one of the largest importers and exporters worldwide. Therefore, your China company registration will push your business into a functioning supply chain that will quickly make it succeed.
    • The Chinese economy is diverse, and, therefore, China offers opportunities in different sectors. Whether your business is in consulting, agriculture products, Medical, technology, manufacturing, automobile, hospitality, health care, or clothing and commodities, you are sure of growth and ultimate success. With the opportunities easily obtainable, your China company registration will be the best idea for business success.

China Company Registration

Foreigner China Business Formation Options

Now that you are aware of the benefits of China company registration, take the opportunity to utilize China’s potent opportunity. There are three main China company formation options available:

Wholly Foreign-Owned Enterprise (WFOE)

The most common business foreign investment format for starting a business in China is a wholly foreign-owned enterprise (WFOE). According to Chinese law, WFOE is a limited liability company 100% foreign-owned by a foreigner and operated. Since as a foreign-owened, you have greater control over all business scope operations, profit targets, and revenue.

A China limited liability company is a separate legal entity and limits your liability to the share capital. Most optional for an overseas business that is entering the Chinese market.

What are the Benefits of a Wholly Foreign-Owned Enterprise (WOFE) ?

  • The WOFE can engage in all activities it has registered for in China.
  • Total control over by decision-makers of the company.
  • It is a perfect way to protect your trademark and IP when expanding operations into China.
  • You can hire staff.
  • It is an ideal opportunity, particularly when wanting to establish a long-term presence in China.

 

Joint Ventures ( JV)

A China joint venture is another type of China business that is a limited liability company. A joint venture must find and register a company with a Chinese partner. In the China JV, the Chinese partner must have controlling shares (+ 50%) in the company. Therefore unlike the wholly foreign-owned enterprise, your Chinese partner will have greater control of the day-to-day operations of the JV company.

The main advantage of establishing a joint venture is that you are able to quickly expand into the Chinese market by utilizing an established Chinese company’s knowledge, China distribution networks, and sales channels. Furthermore, you will worry less about the entry challenges that characterize new Chinese businesses.

While these benefits might be good, it is essential to know that you have to trust the Chinese investment with limited control. This was a significant risk for many of our investors; this is why many set up a Chinese  WFOE.

 

China Representative Office

This was the simplest type of business formation you could open in China a few years ago. Different from China company registration for a WFOE or joint venture that does allow you to engage in profitable business activities, a representative office comes with some significant limitations. For example, a China Representative Office can only engage in non-profit operations such as customer support and market research.

When use a Representative Office?

So, what is the best period to open a China representative office?

  • During market exploration stages, mainly if your company is small or has a restricted budget.
  • If your company is considering expanding to the Chinese market but has not decided yet
  • If your company requires a simple presence in the Chinese market for activities such as quality assurance and liaison with suppliers.

 

The Complete Procedure for China Company Registration

As we have explained, the best legal company formation in China is simply a Wholly foreign-owned enterprise (WFOE). Here are the simple steps to registering a limited liability company in China.

1.Why choose Corporation China to help?

While the Chinese administration tries to support businesses, we must indicate that registering a company is not a simple task without help. The process can be complicated, from interpreting the China company laws to preparing the required documents to set up.

  1. Corporation China is run by professionals who have successfully assisted many investors in the last 18 years with their China company registration. So, we know the best steps and simple ways that eliminate any mistakes. If you want to complete your registration quickly and professionally, work with the best China company registration firm. With 7000 lawyers on staff, they can help you get the job done right
  2. In addition to Corporation China assisting with the China company incorporation, we can also help you with the following company information:

2.Select China Company Business Scope

    The Chinese government has categorized its sectors, emphasizing areas with the potential to grow in the Chinese economy.

    3.Preparation of the Required Documents

    To get authorization to start operating your company in China, the following documents must be submitted for approval. Here are the documents needed:

    • The China company name. The +Administration must approve the name of Industry and Commerce. You can choose an English name and a Chinese name ( we can help with this)
    • The controlling partners. These are the shareholders who will hold the majority of shares in the Chinese company you are incorporating.
    • The management structure. This is the complete China business operational profile, including the board of directors, supervisors, general manager, and legal representative. Submit also scanned copies of the directors’ passports.
    • The legal address. This is the company’s official headquarters and is legally required to perform as a WOFE company registration in China. Luckily, Corporation China was responsible for creating the First Virtual Registered address concept in China. A Registered Address is an excellent option to register your Chinese Company as you do not need to rent an expensive office.
    • Articles of Association. This is another essential document during the China company registration process. It contains essential information on the business description and scope you intend to operate in China. It should outline the core details of the business, including the management structure and the methods to be used for returning profits to overseas investors.
    • Registered capital. The registered capital is the resources needed to run the company. No injected Registered Capital is needed in China.
    • China feasibility study.To prove to the Chinese authorities that the company is feasible, you need to provide a basic business plan and a budget. If the authorities are not totally convinced of the feasibility study, your company registration may not be approved. Corporation China can help in making a convincing feasibility study document.

      4.Approval Certificate Application

      You need to deal with two government offices to get an approval certificate and operating license. The Ministry of Commerce (MOFCOM) and the China State Administration of Industry and Commerce (SAIC). These authorities will review your company application and notify you if the certificate has been approved or declined.

      5.Business Licence Application

      Once issued with your business certificate, you will need additional license/s depending on the type of business you are operating in China. For example, manufacturing, food, beverages, construction, and telecoms in China require additional licenses.

      6.Public Security Bureau Registration(PSB)

      This registration enables your company to get the company chops. In China, company chops or stamps are equivalent to a signature. Therefore, it is impossible to validate any contract if you do not have a company chop.

      7.Open a Chinese Bank Account

      For your China business to start operations, a bank account is required. A Chinese bank account enabls the company to receive funds and be able to pay bills. Opening a China Bank Account you do not have present at the bank, only offered by Corporation China.

      8.Tax Bureau Registartion

      In China, wholly foreign-owned enterprises must comply with the China Tax regulations. However, there are different taxes obligation:

      • Corporate income tax: This is a corporate tax on profits of 25%. However, there are many China FREE TRADE ZONES you can enjoy lower income taxes.
      • Transaction Tax: This tax is a turnover tax, 3-5% of the business sales.
      • Custom duties: Import Export tax on goods exported from or imported to China.
      • VAT (Value added tax): There are a few different tax rates in China: 3%, 6%, 9%, and 13% in terms of industries.
      • Individual income tax: This tax tayh imposed on dividends paid by company partners and company staff salaries. 

      FAQ

      How Do I Register A Company In Mainland China?

      Register a company in China process that will require the preparation of the correct documents and seeking approvals from a few government departments. Registering a company in China steps:

      • Company name in Chinese
      • Select Company Scope
      • Prepare Required Documents
      • Apply for Approval Certificate
      • Apply for Business License
      • Register with the China Public Security Bureau (PSB)
      • Register at the Tax Bureau
      • Make the Company Chops

       

      What Are The Main Documents needed to Incorporate a Company In China?

      The documents that you must prepare in the process of registering a business in China:

      • The Chinese company name ( Chinese and English language)
      • The controlling partner’s information
      • The management structure information
      • The legal address ( Corporation China can supply that)
      • Articles of Association
      • Registered capital and total investment in China
      • A feasibility study ( Corporation China can help with that)

       Can Foreigners Own Companies In China?

      Yes, they can own and operate companies by incorporating them into China. A foreigner can incorporate a wholly foreign-owned enterprise (WFOE), open a joint venture ( JV), or start a representative office ( RO).

      How much Corporate Income Tax saving does Wholly Foreign-Owned Companies in China Free Trade zones in China get? Many companies also set up a Hong Kong company as the holding company for the WOFE

      If your company is in the China Free Trade Zones, the Chinese administration cuts the corporate income tax from 25% to 15% and lowers certain types of business.

      Ready to incorporate in China?

      If you are interested in setting up a business in China, Corporation China can help. Request a quotation now to take the next step towards your dream business.

      Are You Ready

      To Start Your Business In China

      Get a FREE Consultation with Corporation China lead Company formation experts

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      AVA ZHOU

      Account Manager

      Ava's expertise is in Brands entering China and strategy. She has a legal and Marketing background  

      She speaks English, Chinese and "Australian"

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