There are different type of company in China. Foreign Investors generally establish a business presence in China in one of the below three types:

1. Wholly Foreign Owned Enterprise (WFOE); 2. Representative Office (RO); 3. Joint Venture;

Wholly Foreign Owned Enterprise (WFOE)

• Full control by foreign shareholders；
• Most popular and common company type；
• Can generate income, issue local invoices；
• Long-term permits (15 to 30 years)；
• No actual investment required；
• Able to hire local Chinese and Expats in China；
• Limited liability based on the registered capital；
• Profits can be repatriated back to the investors’ home country;
• Regular bookkeeping, and annual tax audits required.

For more information of China WFOE, please read our article Complete Guide on China WFOE Formation.

Representative Office

• Full control by foreign parent company;
• No registered capital required；
• Act as China office, China presences;
• Limited to market research, quality control activities and other non-profits activities；
• Cannot invoice clients;
• Cannot make profits and sign clients；
• Can hire limited number of foreign employees；
• Can hire local Chinese employees through China PEO agency；
• Fewer tax payments;
• Regular bookkeeping, and annual tax audits required.

Joint Venture Company

• Joint controlled by Foreign and Chinese shareholders;
• Avoid Negative lists of WFOE;
• Avoid special license and certifications of WFOE;
• More local resources and advantages
• Complex formation process and shareholder agreements
• Complex cross-cultural management

General Procedure to Establish a Company in China.

1. Company Name Registration- 5 Working Days

Foreign investors shall list 10 Chinese names first to doing the online name approval first.

2. Application for Business License- 8 Working Days

After one of the names is approved, we will apply the business license by submitting the article of association, incorporation application form signed by legal representative, certificate of incorporation of overseas investors certified by the Chinese Embassy, passport or ID card of the legal representatives, shareholders, translation documents if required etc.

3. Apply Company Stamps-2 Working Days

Four basic type of company stamps shall be made including company stamp, legal representative’s stamp, financial stamp and Fapiao stamp. Some company will also have one contract stamp. All stamps can only be done in the authorized stamps agency.

4. Bank account Opening- Depends on the Bank

Usually for foreign company shall open two bank accounts in China. One is the basic RMB bank account, the other one is the foreign currency accounts. Different banks the requirements are slightly different.

5. Open Tax account & Tax Verification-3 Working Days

Within 30 days from the date the business license is obtained, foreign company shall apply the tax account and tax verification in the local tax bureau, apply Fapiao if needed.

6. Open Social Insurance & Housing fund account-5 Working Days

If foreign company need to hire employees after company set up, they shall also set up their company social insurance and housing fund account first. After these two accounts established, they are able to hire employees in China.

Eligibility Criteria for Company Registration in China

Foreign investors who want to start the process of forming a company in China must meet the following requirements:

• The WFOE has to have three persons in charge, the legal representative, the supervisor and the financial manager. These three positions have to be three different persons.
• Liaison Person can be any of the three persons above.
• Registered Address- Company shall have a business address that are able to allow registering company.
• Legal Representative- Can be Chinese or expats. If legal representative are expats, they shall be in presence, or their original passport shall be provided during registration period or bank account opening process.
• Business Scope-choose business scopes in the government list base on the business operating in China. Some of the business can only be conduct after obtaining the special license.

Required Documents List for company registration in China.

1. List of controlling partners/shareholders
2. Shareholding structure of the shareholder
3. Business address or registered address
4. Business Scope
5. Articles of Association.
6. ID/Passport of the legal representative
7. ID/Passport of the company supervisor
8. ID/Passport of the company finance
9. Shareholder and Directors Information
10. Proof documents of the shareholders
11. Notary documents of the shareholders
12. Translation documents
13. Special License & Certification Application

Not all the business can be done by foreign investors, and some of the business need to apply the special license. Below are some of the examples who are strictly controlled. Foreign investors shall be very carefully in applying business of the below business scope.

• Food Circulation License
• ICP License
• Human Resource Service Certificate
• Manufacturing
• Fin-tech
• Chemical

Popular Area/Location in China among Foreign Investors

Shanghai Free Trade Zone

Shanghai Free-Trade Zone (Shanghai FTZ) or Shanghai Pilot Free-Trade Zone is one of the most popular destinations to do business in China among foreign investors. Shanghai free trade zone has carried out institutional reform and innovation in areas of investment, foreign trade, finance and supervision to establish a foreign entity. It offers:

• Simplified foreign trade supervision process
• Negative list for investment management
• Import Tax Exemption
• Lower Corporate Tax Rate
• Free Foreign Exchange
• Customs Clearance
• Fast VAT Rebate
• More local and expats talents benefits

Frequently Asked Questions

Can I hire employee in China before my company established?

Yes, you can hire employee in China through China PEO & Employment solution before your company fully established. JSC will hire the employees you selected and handle their monthly payroll, tax and benefits contribution, while employees are work and managed by you. We will transfer the employee to your company once the company fully established.

Can foreigners establish company in China?

Yes. Foreigner can setup a wholly foreign-owned enterprise (WFOE), open a joint venture, or a representative office in China.

Can I apply the work visa as the legal representative of a WFOE?

Yes, as long as you meet the requirements for employment in China and you are able to use WFOE to hire yourself as an employee and sponsor the work visa.

Any minimum registered capital required for foreign companies incorporated in China?

No minimum registered capital requirements for normal companies incorporated in China. However, there are minimum registered capital requirements for some business that need special license, for obtaining such special license, minimum capital shall be required.

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

Yes and no. During the process of corporate registration in China, legal representative in most of the situation no need to be physically present, we can complete all the process on behalf.

Do I need to rent a office before company registration?

You either need to have an office or a registered address in China. During the process of company registration, business address shall be necessary. If you don’t have the office in the early stage, we can provide the registered address for registering only.