How to Register a Company in China?

With the rapid development of Chinese economy and various supportive policies provided by the government, entrepreneurship has become a booming trend in China. University students, stay-at-home moms, Chinese nationals, but also foreigners from all around the world are fully embracing this opportunity.

All of those who are ready to test their business idea in Chinese market, are advised to follow the procedure below.

1. Gather background information on competition, legal framework, import policies, import licenses and certifications, IP protection and other;

2. Calculate market potential;

3. Come up with a business plan with recommended market-entry strategy including geographic location and sales channels;

4. Learn about Chinese business etiquette and

5. Start the company registration procedure.

If interested in any of the above, please contact us, we will happily provide you with the answers that will help you decide whether to continue pursuing the idea in the same way or to find a way to adjust it.

Those who have already completed detailed market research and have formulated the business plan (steps 1-4), are only left with The Company Registration, which can be roughly divided in 9 sub steps.

The Company Registration

1. Type of enterprise

Categories of enterprises in China are numerous, however, foreigners are allowed to register only a few: Limited Liability Company, Wholly Foreign-Owned Enterprise, Partnership Enterprise, Sino-Foreign Joint Venture, Sino-Foreign Cooperation, Chinese and Foreign Cooperative Business Enterprise and Representative Office. Even though most foreigners settle on Wholly Foreign-Owned Enterprise, this option is not suitable for everyone.

2. Company name in Chinese

As simple as it may seem, this is the step that most entrepreneurs find particularly difficult. The good Chinese name resembles the sound of the company name in English, its translation should be similar to its meaning in English or at list consistent with the company’s line of work and it should include Chinese characters with positive meaning. On top of that, the name cannot be similar to any other company name that has already been registered anywhere in China and cannot include words that are harmful to the national and social public interests. Additionally, Chinese name is most likely not to be approved in case it contains words associated with a foreign country, cannot include numbers, superlatives and has to follow numerous other constraints.

3. Business scope

The scope of the business refers to the categories, varieties of items and services the company is about to perform.

4. Company Registration Address

In China, most properties are either labeled for commercial or for residence purposes. A legal entity in China, unlike some of the other countries, can only be registered at the commercial property where the company is actually renting its offices. For companies that do not require an actual office space, it is possible to use a virtual address.

5. Shareholders IDs

Provide identification documents (copy of passport) of all shareholders.

6. Registration capital

Companies registered in China are not required to verify the mandatory capital contribution and register the paid-in capital. A registered capital, however, still needs to be determined in order to set up a company and will be seen as a “liability” for the shareholders in case of bankruptcy. Shareholders themselves can decide when and how (cash or not) the capital is to be deposited.

7. Documentation

Each company has to submit the following documentation: Resolutions of Share holders, Letter of Appointment of the Executive Director, Letter of Appointment of the Supervisor, Articles of Association and possibly other documents depending on the type of company and industry.

8. Business license

Business license is issued by the Administration for Industry and Commerce (AIC). Business owners or individual operators who do not have a business license will not be allowed to open their business.

9. Bank Account

Once all previous steps have been accomplished, the company bank account can be open and the company stamp can be made.

Conclusion

The company registration follows a predefined procedure in most of the cases, but it does not mean that it is straightforward. It can be roughly divided in 9 steps explained above, but one should note that some deviations are common. For example, different industries may require different licenses, Retail and Wholesale Industry will require Liquor Retail, Food Business or Tobacco Monopoly Retail License. On the other hand, Manufacturing Industry, for example, will require Waste Electrical and Electronic Products Processing Qualification, Vehicle Maintenance Business or Food Production License.

For detailed information about your industry, procedure and costs related with company registration, special licenses and more do not hesitate to contact us. We are happy to help.

Categories: China market research, China company registration, China market entry