China Trading Company Registration.

China Trading Company Registration in 2024.

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.”

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 AIC (Administration for Industry and Commerce) in China issues a consolidated “5-in-1” business license, which combines five essential licenses previously issued separately. This streamlined process simplifies the registration for businesses, including trading companies. The five licenses included in the “5-in-1” business license are:Business License: This is the primary license that grants a business the legal right to operate in China. It includes the company’s name, registered address, business scope, registered capital, and legal representative.

Organization Code Certificate: This certificate assigns a unique identification code to the company, used for various administrative purposes such as tax registration and social security registration.

Tax Registration Certificate: This certificate registers the company with the tax authorities, allowing it to fulfill its tax obligations. It includes the company’s tax identification number and tax categories.

Social Security Registration Certificate: This certificate registers the company with the social security authorities, enabling it to provide social security benefits to its employees.

Statistical Registration Certificate: This certificate registers the company with the statistical authorities, requiring it to submit statistical data related to its operations.

For a trading company in China, obtaining this consolidated “5-in-1” business license is a crucial step in establishing its legal presence and fulfilling its regulatory obligations. It simplifies the registration process and provides a unified license that covers various aspects of the company’s operations.

 

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)..

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:

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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