Company Registration in China
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INCORPORATION OF A COMPANY IN CHINA
Starting your own business in China is no more complex process. However, there are certain prerequisites which need to be taken care of before planning to establish a business in China. Generally it is advisable to take initial guidance from experts before setting up your company in China. The business environment is unique in China as compared to several other countries.private limited company.
A rational investor during the initial phase of its company must take decision that are financial viable for the company. So it is advisable to start it as an “Umbrella Company”.
What is an Umbrella company?
An Umbrella company acts like a helping hand in the host country. It helps you in:
Work visa for foreign employees.- Recruitment of employees.
- Salary & subsequent taxation related to employees.
- Receiving payment from your Chinese counterparts.
- Making payment to your Chinese counterparts.
- Renting office/warehouse/other property.
TYPES OF COMPANY INCORPORATION IN CHINA
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1
WHOLLY FOREIGN OWNED ENTERPRISE (WFOE)
A company incorporation in China that is solely & exclusively formed by foreign nationals and there is no direct investment from any mainland Chinese investor or resident. However, to setup a WFOE, an investor must have an agreed level of investment. It allows complete transparency & certain freedom to operate in China. Generally WFOE are in incorporated in form of Limited liability Company wherein the Liability of investor is limited to its share in the company.
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2
JOINT VENTURE ENTERPRISE
A company which is controlled by both Chinese & foreign counterparts. Joint venture is a collaboration of a domestic and an international company. This form not only shares the profit/loss of the joint entity rather it also helps in transfer of technology, workforce, understanding the local business environment. For the company which is new and wants to grab the market in a new potential geographical location without much complication, Joint venture is the most desired choice.
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3
FOREIGN INVESTED COMMERCIAL ENTERPRISE (FICE)
FICE is established for the purpose of retailing, wholesaling, franchising & trading in China. The regulations for FICE are comparatively quicker & enlarge the scope of business for the foreign investor to conduct trading activities. The registration of these enterprises is relatively easy as compared to WFOE/Joint Venture.
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4
REPRESENTATIVE OFFICE IN CHINA (RO)
RO act as a market research interface for the company to understand the scope & depth of Chinese market for future investments. They are not allowed to indulge into any profit making activity. They are not even allowed to sign on behalf of the parent company, nor receive any revenues or pay any taxes etc. However they are liable to pay all the taxes on the expenses incurred by them (incl. salary paid to employees or any office/warehouse rentals). Monthly tax report is submitted to the China tax authorities.
HOW TO INCORPORATE YOUR COMPANY IN CHINA
1. Submit application (Containing proposed name of your entity) with company registration authorities of China as required by the Chinese company law.
2. After due consideration of the documents & condition specified therein are met, Registrar of companies under the Ministry of Commerce (MOFCOM) shall register the proposed entity as Limited liability company (LLC), Joint venture, Wholly foreign owned entity (WFOE) or Representative Office (RO).
3. Business scope: Determine your business activities that you want to carry out in China.
Sorting of the documents which include:
- Proposed name of company (pre-registration)
- Company legal address
- Organisational structure of the company
- Article of association (AOA)
- Capital structure (paid-up, subscribed, total share capital)
5) Register with Public security bureau (PSB): with this you will get official company chop which is important to run your business in China. Chop are equivalent to the official seal/signature of the company.
6) Register with state administration of foreign exchange (SAFE): This can allow you to open your foreign currency capital account which can be opened in Chinese local bank account.
7) Register at the tax bureau & setup your tax structure: Get your VAT, sales tax from state administration for relevant jurisdiction.
8) Fresh license after all the documents are verified by the authorities.
Company Registration in China FAQ
The process of incorporation in China is more convenient and flexible. The process for incorporation is very well mentioned in the initial context of the article. If you are looking forward to start your venture in China, kindly contact Caonweb and we assure you the company incorporation in China with minimum time frame.
Yes, a foreigner can initiate the process of incorporation in China. Incorporation in China starts with an application to the State Administration for Industry and Commerce of China. The Articles of Association (AOA) must comprise information about the owners, the name of the company, business address, activities, representative and the board of directors.
Yes, it is necessary to open a bank account in China. One of the requirements of incorporation in China is having a corporate bank account with their local bank for minimum share capital and for future financial operations. All the transaction must be in the local currency.
Since we all know that China being the second largest economy in the world having a strong financial market standing at an international level. It has a strong manufacturing, tourism, agriculture, engineering as well as energy sector in place along with a developed IT skills & flourishing economy of China.
We at CAONWEB charge a very nominal fee for online company incorporation in China.