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Onshore Company
Introduction Of
Company Set Up In China
The primary factor for foreign investment to enter the Chinese market is related to its growing middle-class consumer population.
The size of the Chinese middle class is 300 million people, far more than any other Asian country: It is estimated that by 2030, 70% of the Chinese population will be middle class.
In order to attract skilled, high-tech, advanced services and excellent talents, the Chinese government is actively expanding the potential for foreign investment. For example, the Foreign Investment Law, effective from 2020, provides foreign investment enterprises (FlEs) with greater flexibility to set up companies.
I.Basic introduction of China
- In order to comply with the new trend of global economic and trade development, China has taken the initiative to open up major measures and strive to cultivate an international and legalized business environment. Its trade is becoming more frequent. Investors who choose to register trade/service companies in China are increasing day by day. The business has the following advantages:
- All Fortune 500 companies, from Apple to Tesla and Oracle, have operations in China. These brands are attracted by this fast-growing economy and use it to expand globally. If the most respected multinational companies use China as a springboard, then I believe it will not be a wrong decision to follow in their footsteps.
- There are many positive factors in China that can help companies succeed. With a population of 1.3 billion, your business can ensure a ready market. In addition, China is strategically located in the Far East, so you can easily enter the markets of neighboring countries such as Japan and Thailand.
- China is the fastest growing economy in the world and one of the largest importers and exporters. Therefore, registering a company in China will enable your business to move to a complete functional chain, thereby achieving further business expansion.
- The Chinese economy is very diversified, so it offers opportunities in different fields. Therefore, whether your business is agriculture, technology, manufacturing, automobiles, electronics, or technology and information industries, you have long-term growth opportunities.
II.What are the advantages of registering a company in China?
- Registered as a wholly foreign-owned enterprise, this independent legal entity will be able to:
>>Directly hire local employees to ensure that they pay social insurance and housing funds.
>>Independently decide and supervise the strategy in China without a Chinese partner.
>>Issuing deductible value-added tax invoices and collecting RMB/foreign currency payments.
>>After obtaining the local business license, you can legally conduct business and operations throughout China.
>>Obtain local subsidies and funds from government departments and obtain RMB loans or financing from Chinese and foreign banks.
>>Can import/export independently, export and apply for export tax rebate.
>>It can be used as a responsible unit in China for various businesses, such as imported cosmetics/medical equipment/food...etc.
III.Which city in China should we choose to register the company?
- If you want to enter the Chinese market and register a company, it is important to understand that different cities and regions are suitable for different types of industries. For example, Shanghai is famous for investment in finance, automobiles, chemicals, and logistics, while Shenzhen is developing into high-tech industries such as smart phones, IT equipment, home appliances, robots, and drones.
- Other factors to consider when finding a suitable location may be government regulations (especially in terms of environmental impact), infrastructure and trade routes, and customer and distributor bases.
- Generally, coastal provinces, large cities such as Shanghai, Suzhou, Guangzhou, Beijing, Shenzhen, and Hangzhou, and first-tier cities are more friendly and familiar with foreign-invested companies. The following is a basic introduction to the major cities for foreign investment:
- 1.Shanghai:
Shanghai is the most populous city in the Mainland, and it is also a center of international finance and trade, innovation and technology, transportation and logistics. Many companies across the country will give priority to setting up companies in Shanghai. Shanghai is turning to a post-industrial economy and is striving to develop six industries: electronic information/
automotive/petrochemical and fine chemicals/steel
/biomedical industries. The top three industries are financial services, retail, wholesale and real estate. Surrounded by Zhejiang and Jiangsu provinces, Shanghai has close ties with Suzhou Industrial Park and Changshu Economic and Technological Development Zone, where domestic and foreign manufacturers and traders have established factories and warehouses.
- 2.Shenzhen:
Shenzhen has a strong development in trade, innovative technology, financial services, modern logistics and cross-border e-commerce. Many Chinese high-tech start-ups that have grown up in Shenzhen have rapidly developed into multinational automobiles, such as Tencent and Huawei. Therefore, many technology companies choose to register companies in Shenzhen.
- 3.Suzhou/Kunshan:
Many electronics-related industries will give priority to the establishment of companies in Kunshan. It is China’s first county-level city with an industrial output value exceeding one trillion yuan. It is currently vigorously developing emerging industries such as artificial intelligence, intelligent manufacturing, aerospace, and new materials. It is also a gathering place for manufacturers in the electronics/semiconductor industry, and the supply chain of related industries is complete.
- 4.Xiamen:
Xiamen is a coastal city located in the southeastern region of Fujian Province, China. It is an important port city and also one of China’s special economic zones, aimed at encouraging foreign investment and economic development. In recent years, Xiamen has experienced rapid economic growth and has become one of China’s most significant cities for trade, finance, and high-tech industries.
IV.What are the types of foreign companies registered in China?
- Wholly Foreign Owned Enterprise (WFOE)
For business owners who want to do business in China, the top priority is the Wholly Foreign-Owned Enterprise (WFOE). According to Chinese law, WFOE is a limited liability company 100% owned by foreigners or operated by foreign companies. Since investors can hold 100% shares, this means that they can better control their operations, profit targets and income. As a limited liability company, this also means that it is an independent legal entity and limits your liability to the capital invested. This is the most advantageous choice for overseas companies aiming to enter the Chinese market. Advantages of WFOE:
>>Allow companies to engage in all activities registered in China.
>>The company’s decision can be made completely.
>>When expanding the business to China, you can register your own trademark as a local independent legal person.
>>You have full autonomy to hire employees.
- Wholly Foreign Owned Enterprise (WFOE)
For business owners who want to do business in China, the top priority is the Wholly Foreign-Owned Enterprise (WFOE). According to Chinese law, WFOE is a limited liability company 100% owned by foreigners or operated by foreign companies. Since investors can hold 100% shares, this means that they can better control their operations, profit targets and income. As a limited liability company, this also means that it is an independent legal entity and limits your liability to the capital invested. This is the most advantageous choice for overseas companies aiming to enter the Chinese market. Advantages of WFOE:
>>Allow companies to engage in all activities registered in China.
>>The company’s decision can be made completely.
>>When expanding the business to China, you can register your own trademark as a local independent legal person.
>>You have full autonomy to hire employees.
V.Common types of registered companies in China
If it is distinguished by the type of operation, the set up a China company can be classified into the following categories:
- TRADING COMPANY
It can carry out other related supporting business such as wholesale, retail, import and export of goods in China or other regions. In addition, it is necessary to operate the franchise qualification industry (such as alcohol, food, cosmetics, medical equipment, etc.). Apply for a license. To register a company in China, such as Shanghai, Suzhou, Hangzhou, and Shenzhen, you can find a professional agency company to handle everything.
- SERVICE-TYPE COMPANY
The establishment of investment company business in mainland China is mainly based on service nature, such as setting up mainland consulting, software APP development, marketing, agency, catering management, etc., and operating the franchise qualification industry (such as restaurants, travel agencies). …etc.), you need to apply for a license.
- CHINA BRANCH COMPANY
Investors who set up companies in mainland China, and additional branches in other locations in the China Free Trade Zone, their accounts need to be merged into mainland subsidiaries.
- SOLE PROPRIETORSHIP FACTORY
The enterprise must be conducive to the development of China’s national economy and adopt advanced technology and equipment, or all its products are exported or exported.
- REPRESENTATIVE OFFICE
Set up a representative office in the mainland. Investors can conduct market research and development in mainland China, but they cannot have any revenue activities in China. According to the amount of mainland capital, there is no need for capital.
VI.Comparison form of China company set up type
NO. | Company type | Foreign trade | Foreign factory | Service type company | Office | Small-private-business (HK、TW、MO) |
1 | Minimum capital | RMB 500,000 | RMB 500,000 | RMB 100,000 | Ｘ | Ｘ |
2 | Personnel regulations | 1 Director 1 Supervisor (Or set up a board of directors) | 1 Director 1 Supervisor (Or set up a board of directors) | 1 Director 1 Supervisor (Or set up a board of directors) | Chief representative | person in charge |
3 | Certification before registration | a.registration certificate | a.registration certificate | a.registration certificate | a.registration certificate | Ｘ |
b.Register of directors | b.Register of directors | b.Register of directors | b.Register of directors c.Register of shareholders | Ｘ | ||
c.Register of shareholders | c.Register of shareholders | c.Register of shareholders | d.Bank reference | Ｘ | ||
4 | VAT | 13% | 13% | 3% | Ｘ | 3% |
5 | Corporate income tax | 25% | 25% | 25% | 25% | Ｘ |
6 | Personal Income Tax | 5%-45% | 5%-45% | 5%-45% | 5%-45% | 5%-45% |
7 | Earnings distribution withholding tax | 10% | 10% | 10% | Ｘ | Ｘ |
8 | Import and export qualifications | √ | √ | √ | X | X |
9 | Qualifications of shareholders or responsible persons | 100% foreign investment | 100% foreign investment | 100% foreign investment | 100% foreign investment | Hong Kong, Macao and Taiwan self-employed |
10 | Social security | √ | √ | √ | √ | √ |
11 | Domestic reinvestment | √ | √ | X | X | X |
VII.The establishment process of China company registration
- 1.China company establishment application company name
Approval of registered company name.
- 2.Business filing
To set up a company in china, a foreign-funded enterprise must first obtain a record from the local bureau of commerce before applying for investment
- 3.Apply for business license
Companies registered in China that have passed the approval of the Foreign Trade and Economic Cooperation Bureau can apply to the Administration for Industry and Commerce for business registration approval.
- 4.China company application engraved chapter record
After completing the application for the business license of a China-registered company, a seal must be engraved with the designated unit and applied to the Public Security Bureau for seal filing.
- 5.Handle tax registration certificate and foreign exchange registration
Foreign-funded enterprises must remit capital in U.S. dollars, and need to handle foreign exchange business and go through the registration of corporate taxation.
- 6.Open a bank account
Foreign companies need to open a capital account (foreign currency)Basic corporate account (RMB account).
- 7.Handle import and export registration
Establishing a China trading company to register an import and export enterprise must apply for import and export business registration
VIII.Documents to be prepared for the registration of a China company
- The registration information of the investor company that establishes the mainland company must be certified by the embassy abroad.
- Register the establishment name of the mainland company.
- The registered address of the mainland company (a valid lease contract is required).
- The minimum provision for registration of a mainland company: one legal representative (person in charge of the company) and one supervisor.
- The amount of registered capital for the establishment of a mainland company.
- Establish a mainland company to establish business scope and operating period.
- Bank credit certificate.
IX.Inter Area provide China company registration related services
Company registration
Rich experience to provide correct and complete company registration suggestions, complete in the fastest and most convenient way.
Company registered
address assistance
Consolidate local business and administrative consulting, and find an office or registered address that meets the needs of customers.
Value-added tax and import and export rights
Apply for the qualification of deductible value-added tax invoices and complete import and export qualification records.
Agency bookkeeping and tax services
Subsequent to provide agency bookkeeping and basic tax counseling consultation, saving local accounting expenses.
Local business
secretarial services
Local administrative secretary assistance, such as document collection and forwarding/ banking affairs agency/ phone agency...etc.
Various administrative changes
Various company changes such as change of person in charge/change of equity/increased business scope/capital increase.
X.Strengthen the global layout of high degree of flexibility and diversity
- Inter Area Integrating a complete business service platform for customers, only through the seamless connection of information and information, we can continue to become a stable, safe and reliable service provider.
- Of course, these environmental conditions are very competitive, but we believe that only a person or company that is agile and transforms quickly can survive. There fore, strengthening the ability to improve the integration of the service chain is our top priority.
- We are working hard to strengthen investment rules and disciplines and will also improve transparency, and provide investors with unlimited possibilities for the future and huge growth potential. These changes will help Multinational corporate customers build a more diversified and more flexible supply chain, and local resources will be able to deepen their effectiveness and be widely used.