Company Reg.

Shanghai / Shenzhen / Suzhou / Kunshan / Xiamen

Shanghai City / Shenzhen City / Suzhou City / Kunshan City / Xiamen City

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

Basic introduction of China

  • China is aligning with the global trends of economic integration and industrial chain restructuring by continuously promoting a higher level of openness to the outside world. Guided by the principles of rule of law and internationalization, it is optimizing its business environment. With the continuous improvement of free trade pilot zones and foreign investment mechanisms, the Chinese market has demonstrated strong appeal, attracting an increasing number of investors to establish commercial, trade, or service-oriented companies in China to tap into its vast domestic demand and policy advantages.

II.What are the advantages of registering a company in China?

What are the advantages of registering a company in China?

  • Can directly hire local employees and lawfully contribute to social insurance and housing provident fund on their behalf.
  • No need for a Chinese partner; the enterprise can independently formulate and oversee its business operations and development strategies in China.
  • Can legally issue value-added tax (VAT) invoices eligible for deduction, and receive payments in RMB or foreign currency.
  • After obtaining a business license, the company can legally conduct business activities throughout mainland China.
  • Eligible to apply for local government subsidies and funding, and can also apply for RMB loans or financing from both Chinese and foreign banks.
  • Can independently engage in import and export trade, and apply for export tax rebates for export businesses.
  • Can serve as the responsible entity for importing specific products—such as cosmetics, medical devices, and food—bearing legal responsibility for operations within China.

III.Which city in China should we choose to register the company?

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:
  • 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.
  • 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.
  • 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.
  • 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?

What are the types of foreign companies registered in China?

Foreign investors registering a company in China can be categorized into three types based on their investment method:

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.

Also known as a Sino-foreign joint venture, a joint venture enterprise is another type of business that must be established and registered in partnership with a Chinese counterpart. Unless the business involves sectors restricted by national policies—which may impose specific requirements on shareholding—the ownership ratio can generally be mutually agreed upon by both parties. This means that, unlike a wholly foreign-owned enterprise, the Chinese partner in a joint venture will have a certain degree of control over the company’s day-to-day operations.

A Sino-foreign cooperative joint venture (CJV) is an investment structure in which foreign investors and Chinese enterprises cooperate based on a contractual agreement. It can be established either as a legal entity—a limited liability company—or as a non-legal-entity structure, in which both parties share risks and profits according to the terms of their agreement. Compared with a Sino-foreign equity joint venture, a CJV offers greater flexibility, allowing both parties to freely determine the investment ratio, profit and loss distribution, asset ownership, and management rights according to their cooperation objectives, without being bound by fixed equity ratios.

100% shareholding

Not less than 25%

Both parties can agree on 50%.

With a global vision, we develop businesses in China.
Flexible structures and professional execution ensure sustainable growth.

Introduction and Key Advantages of Foreign Investors Registering Companies in China:

  • Wholly Foreign Owned Enterprise (WFOE)
    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:
    A.Allow companies to engage in all activities registered in China.
    B.The company’s decision can be made completely.
    C.When expanding the business to China, you can register your own trademark as a local independent legal person.
    D.You have full autonomy to hire employees.
  • Equity Joint Venture
    The main advantage of establishing a joint venture lies in leveraging the partner company’s expertise, distribution network, and sales channels to quickly enter the Chinese market.
    While these benefits are significant, it is important to note that with limited control, you are essentially entrusting your investment to another party. For many investors, this poses too great a risk, which is why the majority still consider a wholly foreign-owned enterprise as their preferred choice.
  • Cooperative Joint Venture
    The main advantages of a Sino-foreign cooperative joint venture (CJV) are that the investment ratio, profit-sharing mechanism, and management rights can be adjusted according to the cooperation agreement, making it suitable for diverse industry models. Foreign investors contribute technology and international management expertise, while Chinese partners provide local resources, networks, and knowledge of the regulatory environment. Rights, profit distribution, and exit mechanisms are clearly defined through contractual terms, effectively safeguarding the interests of all parties. This structure is particularly well-suited for projects in energy, transportation, infrastructure, and other sectors that require government approval or local collaboration.

The above are all types of company establishment in China.
The following is a detailed introduction to this common business model of China companies.

V.Common types of registered companies in China

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:

  • China limited liability company:divided into China trading and China service companies according to business projects.
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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 Liquor, 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.

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.

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.

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.

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. 

Hong Kong, Macau, Taiwan
Individual industrial and commercial households refer to citizens who, within the scope permitted by law, engage in industrial and commercial business operations.

Comparison form of China company set up type:

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VI.Basic tax burden of foreign trading companies

Basic tax burden of foreign trading companies

In China, trading companies have the same tax rates and standards regardless of domestic and foreign investment. The main taxes are as follows:

Trading companies
Taxation is the same

4Types of companies:

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Corporate income tax

The tax conditions for establishing a company are a type of tax levied on the production and operation income and other income of domestic enterprises and business units. The corporate income tax rate is 25%.

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VAT

1.General taxpayers (13%/6%)
Enterprises whose annual taxable sales exceed the standards for small-scale taxpayers. Small-scale production enterprises with sound accounting can be recognized as general taxpayers.
2.Small Taxpayer(3%)
Taxpayers who are engaged in the production of goods or the provision of taxable services, and whose annual sales taxable value-added tax is less than 500,000 yuan (including the original amount).

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Other

For individuals, non-corporate units, and companies that do not often have taxable activities, even if their annual taxable sales exceed the standards for small-scale taxpayers, they are regarded as small-scale taxpayers to pay taxes.

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Tariff

The tariff rates of import duties are set at ordinary tariff rates and preferential tariff rates. Goods originating in countries or regions that do not have reciprocal tariff agreements with China are taxed at ordinary tariff rates.

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Corporate income tax

The tax conditions for establishing a company are a type of tax levied on the production and operation income and other income of domestic enterprises and business units. The corporate income tax rate is 25%.

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VAT 增值稅

1. General taxpayers (13%) Enterprises whose annual taxable sales exceed the standards for small-scale taxpayers. Small-scale production enterprises with sound accounting can be recognized as general taxpayers.

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Other

For individuals, non-corporate units, and companies that do not often have taxable activities, even if their annual taxable sales exceed the standards for small-scale taxpayers, they are regarded as small-scale taxpayers to pay taxes.

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Tariff

The tariff rates of import duties are set at ordinary tariff rates and preferential tariff rates. Goods originating in countries or regions that do not have reciprocal tariff agreements with China are taxed at ordinary tariff rates;

Note 1: Preferential Treatment for Corporate Income Tax.
From January 1, 2022, to December 31, 2024, for small and micro-profit enterprises with annual taxable income not exceeding 3 million yuan, 25% of the amount shall be deducted and included in the taxable income, and the corporate income tax shall be paid at a rate of 20% (actual tax rate of 5%).

Note 2: Preferential Treatment for Value-Added Tax
From January 1, 2023, to December 31, 2023, a reduced tax rate of 1% shall be applied for value added tax levied on taxable sales revenue for small-scale taxpayers subject to a 3% tax rate. For the value-added tax prepayment program subject to a 3% prepayment rate, a reduced prepayment rate of 1% shall be applied. In addition, value-added tax is exempted for small-scale taxpayers with monthly sales below 100,000 yuan (including the amount itself).

VII.Regulations on the registered capital of Chinese companies:

Regulations on the registered capital of Chinese companies:

China will implement a new Company Law on July 1, 2024, stipulating that shareholders of limited liability companies must fully pay the subscribed registered capital within five years from the establishment of the company. For existing mainland companies, any outstanding subscribed capital past the deadline must also be gradually adjusted to compliance. If there are significant irregularities, the competent authorities in China have the right to demand immediate payment.

The new Company Law changes the previous capital subscription system to a mandatory full payment within five years, while also granting creditors the right to require shareholders to fulfill their capital commitments in advance in cases of overdue debts. This means that if a Chinese company fails to pay due taxes, the tax authorities, as creditors, have the right to demand that the shareholders of the delinquent company pay the subscribed capital in advance. Shareholders should review their subscription commitments to registered capital in Chinese companies and may consider reducing the subscribed capital to lower the risks and obligations associated with unpaid capital contributions.

For a trading company engaged in wholesale and retail, the registered capital commonly ranges between RMB 500,000 to RMB 1,000,000.

VIII.The establishment process of China company registration

The establishment process of China company registration

Step 1 : China company establishment application company name

The company name must cover the region, trade size and industry category. The name can be retained for one year after approval.

Step 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.

Step 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.

Step 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.

Step 5 : Handle tax registration certificate and foreign exchange registration

All companies in China must comply with tax regulations. Therefore, it is necessary to conduct tax registration and arrange relevant real-name verification, log in to financial personnel and apply for invoices. In addition, the company’s initial tax qualification is a small-scale taxpayer. If it is an enterprise with wholesale or import and export business, it must apply for a general taxpayer qualification in order to deduct the value-added tax. For further information on general taxpayer application, please refer to the article “VAT application”.

Step 6 : Open a bank account

Foreign companies need to open a capital account (foreign currency)Basic corporate account (RMB account).

Step 7 : Handle import and export registration

If you need to handle import and export business by yourself, you need to apply for registration separately. In addition, it will take about 3-4 weeks to apply for import and export qualifications. For information about import and export qualification applications, please refer to our other article “Import and Export Application”.

IX.Documents to be prepared for the registration of a China company

Documents to be prepared for the registration of a China company

  • Before establishing a company in China, foreign investors must prepare the necessary documents and information in advance to meet local business registration and foreign investment approval requirements. During the preparation process, certain documents must be notarized in the investor’s home country and authenticated by the Chinese embassy or consulate to ensure their legal validity.

Below is a general list of required documents; actual requirements may vary by business type or region.

A.The registration information of the investor company that establishes the mainland company must be certified by the embassy abroad.
B.Register the establishment name of the mainland company.
C.The registered address of the mainland company (a valid lease contract is required).
D.The minimum provision for registration of a mainland company: one legal representative (person in charge of the company) and one supervisor.
E.The amount of registered capital for the establishment of a mainland company.
F.Establish a mainland company to establish business scope and operating period & Bank credit certificate.

X.Inter Area provide China company registration related services

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.

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Bookkeeping & 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.

Setting up a company in China Q&A

  • 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.

Setting up a company in China Q&A

A: Avoid using names that violate public order and good customs, are misleading, and consist of two or more China characters that comply with national standards. Arabic numerals and English letters cannot be used.

A:When setting up a company in China, some documents do need to be notarized and certified. InterArea has professional experience in handling notarization matters in local countries and can assist customers in handling relevant notarization documents.

  • 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.

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