If you have decided that you do need to establish a separate legal entity in China, it is crucial to comprehend the various alternatives open to you, any restrictions associated with these options, and the process for establishing the specific entity. 

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How to form a company in China

Depending on the region you are registering in, your sector, and the sort of business you are forming, there are different procedures to register a company in China. The steps for writing and forming a WFOE or joint venture are outlined below.

Working with a local professional who can walk you through this procedure and carry out the necessary tasks on your behalf may be a good idea.

Determine the business scope

The business scope in which you intend to operate your business must be determined. You can then decide whether it is permitted, restricted, or discouraged, which will guide your subsequent actions. The Chinese government offers financial incentives for easing some limitations and promotes foreign investment. Innovations in environmental preservation, export, or the development of some of China’s poorest regions are frequently encouraged sectors. It also mandates that a Chinese company hold a majority stake and limits foreign participation in certain areas.

Additionally, it forbids foreign investment in some fields, such as those deemed politically sensitive or harmful to the nation. It’s crucial to choose a business scope that effectively captures current operations while still providing you room to expand in the future. If your company’s scope is deemed to be too broad, your permit application may be completed on time. If you operate outside the bounds of your declaration, a declared business scope that is too narrow or specific may lead to the government closing down your company.

Prepare your documents for incorporation and registration

To register and incorporate your business, you must prepare and submit paperwork. The following actions might be required:

  • Participate in the pre-approval procedure with the administration of the industry. 
  • Make a list of your company’s controlling partners and get it pre-approved.
  • The titles of the board directors and legal representatives, as well as copies of their passports.
  • Get a physical address for your company.

Your articles of association should be ready

Indicate the positions you plan to fill or give details about your current staff.

Set aside time to prepare for the registered capital and overall investment.

Create a budget, business plan, and feasibility study

Prepare additional documentation as necessary, taking into account the size and sector of your company.

To receive your approval certificate, you must then present the relevant authorities with these documents and further proof.

Get a business license

You will have 30 days to register with the AIC and submit an application for your business license after receiving your approval certificate. Consider submitting the following:

  • The pre-approved name of your business in Chinese Investors’ business licenses
  • Names of your directors, general manager, boss, and a lawyer should be included.
  • An endorsement letter from the bank where you have a business bank account.

Depending on the area in which you register your business, you might need to provide extra documentation.

Registered capital deposit

A local corporate bank account is essential for the majority of business entities in China. Additionally, you’ll probably need to fund this account with the registered capital. For these purposes, you can only utilize a bank that is listed with the State Administration of Foreign Exchange. The discrepancy between the total investment and the registered capital may be paid at a later time. The quantity of registered capital is determined by the area in which your firm will be located, the size of your enterprise, your sector, and the kind of entity you are forming.

Complete all required steps

There could be further steps you need to take. Find out from your adviser which of these conditions you must satisfy before starting your business:

  • Establish a tax machine and register your business’s fundamental operational and financial data, CFO verification.
  • Obtain security bureau authorization for business chops.
  • If you plan to import or export products, register with the customs office.
  • Become a member of the State administration of foreign exchange.

Work with an accountant

  • Create a manual for your Chinese employees.
  • Create for your team compliant employment agreements.
  • Assist staff in obtaining visas

You may also find these articles helpful

Taxes in China

Breakdown of China company registration fees and expenses

Registering a Limited Liability Company in China – full guide

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