China represents a competitive and appealing country on an international scale from an investment point of view, and a major force of the worldwide economy. Being a stable business partner in many fields of interest, China is recognized as a fast-growing economy and a global influence, with connections to powerful financial centers. China attracts investors from abroad to place their operations and to generate profits in the most prolific and appreciated industries of this country. If you want to open a company in China you can choose the type of structure that suits most the needs and the future activities. The company formation procedure in China is less bureaucratic and can be entirely overseen by our Chinese company formation agents.
Tannet Group Limited provides business services since 1999 and proudly offered extensive support and certified advice to more than 60,000 clients from approximately 130 countries worldwide. Concentrated on reciprocal advantages, the business advisors at Tannet Group Limited successfully developed a business system comprising full solutions, operation, incubation, capital investment, and methodical management. The assistance offered by Tannet Group Limited is provided at an international scale, with the mention that the business specialists offered in-depth support for thousands of investors and business persons from countries like Japan, Indonesia, France, Canada, Thailand, USA, South Korea, Australia, Liechtenstein, India and Malaysia.
Types of companies in China
Setting up a company in China and having success in the chosen domain will much depend on the business entity and the selected structure for performing the operations. Foreigners can set up the following companies:
• Wholly Foreign-Owned Enterprise (WFOE), the most popular business structure in China;
• joint venture companies destined for experienced business persons in China;
• partnerships which can be suitable for small and medium-sized entrepreneurs;
• private enterprises which can turn into public companies under certain conditions;
• representative offices for those who want to test the Chinese market first;
• sole proprietorships, a simple business structure for small businesses in China.
The State Administration for Industry and Commerce of the People’s Republic of China issues the registration certificate for new companies in this country, including for the ones established with foreign capital.
Here is a video presentation with information about how to start a company in China and about our company formation services in China:
How can I set up a WFOE in China?
Depending on the chosen activities and sector, a WFOE in China can be opened in a fast manner, also considering particular documents for submission and several rules enforced. WFOE represents the common business form for foreigners who want to set up their businesses in China. The following matters are linked to the incorporation of a WFOE in China:
• decide and verify the name of the business with the authorities in charge;
• provide information about the owners (name, nationality, the country of residence);
• set up the activities (an important step after the business structure is settled);
• appoint the board of managers (these can be foreigners or Chinese nationals);
• create a business feasibility report (each type of entity requests such report);
• provide the minimum share capital in a Chinese bank (free trade zones do not require it);
• apply for a business license in accordance with the type of activities;
• register for tax purposes (it is suggested to verify the tax system in China).
Our company incorporation representatives in China can assist foreigners in registering their activities through companies in China. Furthermore, if you want to know the taxes imposed in this country, we suggest you use our tax calculator, or better yet, address your requests at any time. It is also mandatory to hire an accounting firm in China, in order to properly keep the records and the financial activities of your company. If you want to register a company in China, please talk to one of our advisors.
China WFOE formation is not a difficult process if you contact a local lawyer or company formation agent who knows the local regulations and can help you open this type of company in the minimum period allowed by the law. Setting up a WFOE in China means opening an LLC by foreign investors who are the owners of the shares; sometimes WFOE is known as WOFE in China, which is not a correct term, but can be used by some entrepreneurs. China WFOE formation is allowed in nearly every industry, except those monopolized by the Chinese authorities, such as geodetic surveying or marine charting. The main types of Chinese WFOE are:
- China Manufacturing WFOE – performs economic activities in the field of production and sale of different types of goods;
- China Consulting/ service WFOE – offers consulting services in different fields, such as: management, technology, business etc.,
- China Technology WFOE – performs technological activities,
- China Food & Beverage WFOE – for various foods and beverage businesses;
- China Trading WFOE – can make imports and exports different goods and services.
Steps in opening a company in China
Wholly Foreign-Owned Enterprises or WFOEs as they are known can be easily established by investors from abroad who should bear in mind the following steps for registration:
Choose a business name and verify its validity with the State Administration for Industry and Commerce of the People’s Republic of China.
Appoint the legal representative and the board of managers for your WFOE in China.
Create and agree in a feasibility report, a mandatory request for investors in China.
Open a bank account and deposit the minimum share capital of RMB 30,000.
Apply for the necessary licenses and permits for your future activities in China.
Register for tax purposes and social contributions in China.
Company formation costs in China
It is important to have in mind the costs for starting a company in China, and here are the important ones to consider:
Registration fee: approximately RMB 10,000 (around USD 1,460) represent the governmental fees for opening a company in China.
Virtual office costs: approximately USD 80/month for a virtual office package in China.
Minimum share capital: RMB 30,000 or approximately EUR 4,440 for a WFOE in China.
Company formation fee: around USD 2,000 as part of our offer but ask our consultants for a personalized offer.
Accounting costs: starting from USD 100/month for tailored accounting services for your firm in China.
Apply for licenses and permits in China
If a foreign businessman wants to set up a company in the manufacturing or retail sector, a business license must be provided in this matter. The Chinese authorities also ask for licenses and permits for companies operating in the food and beverage sector or in construction, but not limited to these.
Open a bank account in China
Foreigners must take into account an important requirement when opening a company in China, whether it is a WFOE or another structure (joint stock company, limited or general partnership, sole proprietorship), and that is to open a bank account in China. Normally, foreigners can direct the attention to local banks or can choose the foreign financial institutions in China. The documents of the registered company are necessary in this sense. You should also ask for support in registering a company for VAT in China.
Do I need an accounting firm for a company in China?
Yes, all companies in China must consider the services of an accounting firm in China, which can offer the following, in complete agreement with the international accounting standards:
tax minimization methods;
support for the annual financial statements.
As soon as you accomplished the main requirements for company registration in China, you can direct the attention to the available workforce on the Chinese market.
Do I need licenses and permits in China?
Many activities in China are subject to special permits and licenses and the requirements in this sense. For example, the administrative licenses are mandatory for activities set up in the retail or manufacturing sectors. Opening companies in the import and export sector, a productive and appealing domain in China attracts numerous investors from overseas who must, first of all, apply for special licenses and permits in this sense. The following sectors require special licenses and permits:
•food & beverages, and pharmaceuticals are areas in which certain permits are necessary;
•the automotive sector in China is subject to particular requirements, meaning that selling cars in this country cannot happen without registering and operating a joint venture. A Chinese partner is a mandatory request for this type of structure if you are a foreign investor;
•the construction sector is an important field in China, where numerous foreigners are having companies;
•certain areas in the telecommunications might be subject to particular licenses.
How to open a representative office in China
Business persons who want to enter the Chinese market in a fast manner can set up representative offices or ROs with complete support offered by our team of company incorporation agents in China. A representative office in China cannot perform activities but foreigners can deal with the following matters:
•they can verify and test the market before opening the business;
•they can perform varied marketing research in the chosen business field;
•they can develop future collaborations with business persons in China;
•they can negotiate and sign all sorts of contracts in the name of the parent company.
Economy overview in China
The dynamic and distinct market in China has set the status of this country for many years: the world’s biggest economy. The efforts of the Chinese government is the statement of a solid and reliable business climate in China, taking into consideration that the main focus was to attract investments as much as possible and to raise the living standards of the population, among many others. In most industries, the legal framework stands at the base of success and allows investors to develop in the most suitable ways. Technology, energy, engineering, health, manufacturing, import and export, automotive, food and beverages are only a few of the illustrative domains in which business persons can set up companies in China and benefit from numerous advantages like a stable market and varied ways to generate profits.
The following set of frequently asked questions can help foreign business persons understand better the rules and regulations of how companies perform their activities in China:
1. What types of companies can be registered in China?
Entrepreneurs from abroad can set up WFOEs (Wholly Foreign-Owned Enterprise), joint venture companies, partnerships, representative offices, private enterprises and sole proprietorships. WFOE represents the most popular business entity for foreign investors.
2. How fast is the incorporation process in China?
With fewer formalities, a company in China can be registered within a few working days, if all the requirements are respected at the time of documents submission. In order to speed up the company formation in China, we suggest you address to our team of advisors at any time.
3. Does the enterprise need to have an office in China?
Entrepreneurs from abroad can benefit from a traditional office for their future activities in China or can ask for virtual office services for lower costs. One can open a company in China in cities like Beijing, Shanghai, Shenzhen, Tianjin, Hangzhou or Shenyang.
4. How can a foreigner set up a WFOE in China?
The registration process of a WFOE in China starts with an application to the State Administration for Industry and Commerce of the People’s Republic of China. The Articles of Association must comprise information about the owners, the name of the company, the business address, the activities, the representative, the board of directors. As soon as the WFOE is incorporated, the next step is to register for tax purposes.
5. How can a bank account be set up in China?
The corporate bank account is necessary at the time of company registration for minimum share capital and for future financial operations. The bank account must be opened in the local currency if the company’s documents are provided to the chosen financial institution.
6. Can foreigners set up branches in China?
Yes, they can set up branches in China in complete agreement with the Companies Act and the Commercial Code. One should know that the documents of the parent company are necessary when establishing a branch in China.
7. What taxes are imposed on foreign investments in China?
The VAT, the business tax, the income tax, the consumption tax, the resource tax, the stamp tax, and the vehicle and vessel usage license plate tax are among the imposed fees for foreign enterprises in China.
8. Did China sign double tax treaties?
Yes, China aligns with the signatory countries of double tax agreements. There are more than 100 double taxation treaties signed by China.
9. Which are the steps after company incorporation in China?
As soon as the certificate of incorporation has been issued, the owner of the business must open a bank account, hire an accounting firm, apply for tax purposes, register for tax invoice and apply for China work visa.
10. Why should I invest in China?
Without a doubt, China is the second largest economy in the world and represents a strong financial center at an international level. The manufacturing sector, the agriculture, the tourism, the energy, and engineering sectors alongside with the extremely developed IT field sustain and flourishing economy of China.
We are an experienced team of company formation agents in China who can offer complete support in company formation in China and related issues. If you are interested in company formation services in China, we kindly invite you to contact us at any time.
Call us now at +86-755-82148419to set up an appointment with our company formation specialists in China. Alternatively you can incorporate your company without traveling to China.
As a Tannet Group Limited client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in China.