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Set up a Construction Company in China

Set up a Construction Company in China

The construction field in China is extremely appealing to international investors looking for profits in this sector, and the applicable legislation needs to be understood before commencing such activities. The Special Purpose Vehicle or the SPV might represent an ideal business form for opening a construction company in China, however, joint ventures or state-owned companies can be among the choices of entrepreneurs in China. If you decide on establishing a construction company in China, we recommend you talk to one of our company formation specialists in China and ask for support and assistance.

How do I open a SPV in China?

The Special Purpose Vehicle is the type of company usually formed under the rules of the limited liability company or partnership and meant for temporary projects. The main objective of a SPV is to protect companies from financial risks. This is a legal entity which can be a great option for establishing a construction company. Below you may find the main characteristics of SPVs:

  1. SPV is used for owning a wholly foreign-owned enterprise in China.
  2. The SVP can be the single shareholder of a WFOE in China.
  3. The distribution of profits and the management is made at a SPV level.
  4. SPV can be established in Hong Kong for low taxation.

Construction companies can be established in China with not that complex formalities however it is suggested to pay attention to the conditions involved. You can get in touch with our company formation agents in China and find out more details in this matter. It is recommended to have the support of a professional team and skip the difficulties in terms of language and business requirements.

What kind of activities can I develop with a construction company in China?

Construction companies can be involved in design and architecture activities, subcontracting building construction projects, or selling primary materials to builders in China. Design counseling for construction companies can be provided. 

WFOE China is the most popular business structure, which can be established by only one shareholder. CNY 30,000 is the minimum share capital required, and it must be deposited in a local bank account. Next comes the registration of the company for the payment of taxes, but also obtaining the desired business license. But in order to be able to guarantee that all the company registration formalities are fulfilled, we recommend you contact one of our company formation agents in China.

Stages of a construction project

Companies in the construction field are contracted by all sorts of firms or independents for which several projects are offered. Below you can find information about the main stages of a construction project, a model which can be adopted by your firm in front of clients:

  • the project can be drafted in agreement with the budget offered, specific research and standards;
  • the design is the preliminary stage and this can be established by a team of architects, engineers, project manager, etc.;
  • the pre-construction stage often starts when the contractor agreed with the project and the design;
  • the procurement stage involves the acquisition of materials, workforce and equipment. A construction company can provide all these;
  • a pre-construction meeting is then commenced and developed before the job starts;
  • the post-construction stage consists of a new construction building commissioning, owner occupancy and the closure of the construction project.

These are a few of the services a construction company can offer in China or abroad. If you would like to know more about the company registration in China, feel free to talk to one of our specialists.

Opening a WFOE for having a construction company

Wholly Foreign-Owned Enterprises are directed to abroad entrepreneurs in China, providing complete control in the firm. This can be established for running your construction company in China, with a minimum share capital of RMB 30,000 (except free trade zones in China), a feasibility report, a local bank account, a legal representative, special licenses and permits plus the registration for tax purposes. In terms of costs, the registration of a company in China is around RMB 10,000, a virtual office starts from EUR 80/month, the company formation fee is about USD 2,000 and the accounting costs start from USD 100/month.

Below we have gathered information about the investments and the business in China which you can find it interesting if you are a foreign entrepreneur:

  1. Approximately RMB 5.052 represented the average monthly gross wage in China, in 2018.
  2. The FDI investment flow for 2018 in China was USD 1097 billion.
  3. More than 3,600 companies have been registered in the first 10 months of 2018.
  4. $13,407 billion was the total value of GDP of China in 2018.

Construction companies can be ideal businesses for foreign investors looking to thrive and generate profits in China. If you would like to know more about the company formation steps and about the general rules imposed in China, we kindly invite you to contact our team of company formation agents in China.