China Trading Company Registration.

China Trading Company Registration in 2022.

Apply for name approval and registration.

The first step in registering a WFOE in China is to choose a company name and get it approved.
The name choice must follow rules set up in Chinese company registration laws. The company name must include the company industry or brand, operating region of the business, and a suffix of “Company Limited.”

The following will be checked during the companys’ name approval.

Availability of the requested name. Corporation China has the ability to check out for you.
Inclusion of restricted words, such as “China”, “State” or “National”.
Inclusion of foreign characters or symbols.
Whether the name is confusing or misleading.

Find out more about setting up a Trading Company in China.

Don’t forget the importance of naming strategy and branding. Just as overseas, your company’s name is the first impression of your company. It should clearly reflect the company’s role and image.

Consideration should also be made of the characteristics of the Chinese characters. Many words or characters have similar meanings or sounds which can strongly influence the impact of the chosen name (both positively and negatively!)

Note that the name registration can be done early whilst you prepare further, and to aid trademark registration. It is not necessary to immediately submit a company filing to MOFCOM after the name is approved. Note also that it is common to submit more than one name for consideration.

 Early registration of company name.

Note that the name registration can be done early whilst you prepare further, and to aid trademark registration. It is not necessary to immediately submit a company filing to MOFCOM after the name is approved. Note also that it is common to submit more than one name for consideration.

Registered Address as necessary.

Before submission for WFOE setup, it is necessary to have a lease for company space in the city of registration. The contract for this needs to be valid for a year from the registration date. It is advisable to include a condition in the leasing contract to cancel the lease in case of registration refusal or difficulties.
As with any contract in China, steps should be taken to minimize future problems – such as checking the owner’s details and land rights certificate for the property being leased. Corporation China offers Virtual Addresses that could be used for Company Registration in China.

Carry out environmental impact assessment – Only for a manufacturing WFOE.

If registering a manufacturing WFOE, an environmental impact assessment will need to be carried out by a registered agency. This is done in order to obtain an approval certificate from the local environmental protection authority.
The amount of approval needed for a manufacturing operation varies depending on the size and potential impact of the operation. Factors that will be considered include the type of materials used, produced, and disposed of, as well as the machinery to be used. Any existing plans for environmental protection will also be taken into account.

Online registration via MOFCOM.

The registration process has been significantly simplified in recent years, and now makes use of an online filing submission. This is much faster than the previous methods, but still requires a lot of documentation! It should be noted that there is a somewhat greater burden with online submissions to have all details correct and finalized. The process of “blind submission” does not allow for discussion with authorities during submission. If rejected, the application will need to be revised and resubmitted.

Apply for a “5 in 1” business license from the local AIC.

Following approval from MOFCOM, the application for a business license with the local Administration of Industry and Commerce (AIC) needs to be made. This is another process that has been greatly simplified and quickened in the past couple of years. An application is made for a so-called “5 in 1” business license, which covers all the major licenses required for a new company. Previously each of these required separate applications and naturally, this will take a lot of time.

Again, this is now an electronic submission, accompanied by significant documentation (see the section on documents required). Once submitted the AIC will share documentation with other relevant authorities to issue licenses – a major time improvement!

The 5 licenses issued by the AIC are:

The business license.
Tax registration certificate.
Organization code certificate.
Social security registration certificate.
Statistical registration certificate.

After registration and licensing of a company in China.

After the company has been established and licensed to do business in China, the remaining set-up steps can be considered “post-licensing” tasks. We would expect to reach this point in 2-3 months..

Carving chops for the new company.

To Chinese business newcomers, the importance of chops is often a surprise! Every company requires a set of chops, or seals, to be used as a representation for signing official documents. These hold the final say, above individual signatures.

Chops can be applied for through the Public Security Bureau (PSB) following company set up. Several additional chops are needed for different business areas (e.g. financial, invoice sealing, and customs if appropriate). Each will have the company name in Chinese and English if required.

Opening bank accounts.

Once chops are obtained, they can be used to open the WFOE’s Chinese bank accounts. A WFOE should have at least two bank accounts, preferably with the same institution (Chinese or foreign banking institutions are equally acceptable depending on company preference)..

A local currency RMB standard company account. This can be used for payments and receipts in RMB, as well as for company tax payments and day-to-day operating costs.
A separate capital contribution account, designated in foreign currency. This is the official account through which capital can be injected from overseas.

VAT registration.

WFOE’s must be registered for VAT payments with the local tax bureau. There are two different categories for VAT registration for all companies – “general” and “small scale” (with low sales volume). A new WFOE which qualifies for small scale may choose to register under either category.

In general, a lower VAT rate is paid for companies that qualify as small-scale enterprises, but there are some potential advantages in registration for general status (such as the ability to deduct input VAT). Discussion of the individual situations with a tax expert is advisable here.

Customs and import-exit registration – for trading WFOEs only.

For trading WFOEs involved in import-export, there are several additional registrations required, which are not automatic under the AIC business license application. These must be made separately after the company is established and the exact requirements depend on the company operation area, but will likely include the following:

Import-export license.
Customs registration certificate.
Registration with Entry-Exit Inspection and Quarantine Bureau (for quality inspection).

Customs and import-exit registration – for trading WFOEs only.

It is best to ensure everything is set up correctly before the company starts trading, although this is not formally necessary. Formal contracts need to be issued from the new WFOE for all local employees. Also, registration will need to be made for employee tax and social benefits accounts.
Companies that already have local employees working for them, often through a previous representative office structure or employed on their behalf by a Chinese agency. The new WFOE can now employ them directly.

China Trading Company Registration

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