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Establish a Subsidiary in China

Updated on Friday 18th May 2018

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Establish-a-Subsidiary-in-China.jpgSubsidiaries in China or Foreign Invested Enterprise (FIEs) as they are known, are preferred business forms by foreign investors who want a flexible and independent structure, with 100% ownership of the share capital by the parent company. Knowing the requirements for establishing a subsidiary in China and the attributes of the Chinese market will lead to a proper implementation of a subsidiary. In this matter, our company formation agents in China can offer information and in depth-assistance. If you want to open a company in China please talk to our advisors at any time.
 

The features of a subsidiary in China

 
From the beginning, we mention that subsidiaries in China may act in accordance with the rules and regulations of the parent company but it can operate on the Chinese market under a different name. Likewise, if the subsidiary in China has its share capital 100% owned by the parent company, then the control of the financial operations and of the activities are on behalf of the foreign enterprise. To directly do business in China’s performant sectors under a legal entity like the subsidiary, a business license is mandatory. The owner of a subsidiary in China has legal powers to appoint the board of directors and impose their liabilities. We mention that subsidiaries in China are subject to long-term business objectives, which is why it is a preferred and a trustworthy form of business in this country.
 
As for the company registration of a subsidiary in China, one must confirm the documents and the information about the parent enterprise, the share capital and the purposes of such entity. We remind that foreign investors can benefit from the company formation services offered by our team of specialists in company incorporation in China.
 

How can subsidiaries be registered in China?

 
Subsidiaries in China are also known as Foreign Invested Enterprises or FIE which can be registered by at least one foreign investor. The incorporation procedure is the same as for WFOEs in China, in respect with the Companies Act. It is good to know that there are certain sectors in which subsidiaries are not allowed to activate in, such as telecommunications. In this matter, a joint venture is recommended, meaning that a company can be established by a local and a foreign investor.
 

How are subsidiaries controlled in China?

 
Subsidiaries in China are managed by a board of directors which is established at the time of company incorporation. This is also available for subsidiaries set up by only one stockholder. In addition to the management linked to the board of directors of a subsidiary in China, several measures between the parent company and the subsidiary in China can be set up for a better control of operations in the country. It is good to know that subsidiaries in China can create internal documents which can contain information about the liabilities of the managers and the owners and complete details about how  such entity can be controlled. 
 

What are the benefits of subsidiaries in China?

 
Starting a business in China is subject to an easy incorporation, particularly if you are interested in a WFOE in China or a subsidiary. The latter one is subject to several advantages an entrepreneur takes into consideration before setting up a company in China, such as:
 
  • • subsidiaries can perform the activities through WFOEs in China;
  • • you can rely on the local skilled workforce, there are tax benefits, and it has a flexible structure;
  • • they can act independently on the Chinese market compared to branches;
  • • the Intellectual Property Rights are protected by the authorities in China;
  • • the business licenses can be easily obtained (ask our advisors for support in this sense).
 
Long-term business strategies are related to subsidiaries in China which is why such entity is accepted and established by many foreign entrepreneurs. You may contact our team of advisors if you are interested in setting up a company in China.
 
 

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