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:
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 advice;
- 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.