Company Registration in China
China is a growing market for both supplies and consumer goods. Get a License of Incorporation, Articles of Formation, an Authorization Letter, and an office location in China.
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Incorporating a company in China, the world's largest and fastest growing economy, is a boon to your business and its growth. HOW TO DO Company Registration in China?
Company Registration in China - OVERVIEW
China is the global substation when it comes to exports related to electronics and other products. This is because it gives seamless production abilities, which give it the best place in the business for making products. Till now, global organizations such as Apple and Microsoft consider China’s resources for assembling their products. Aside from this, cheap labor is added advantage why companies favor investing in China. Therefore investors and organizers go through the process of company registration in China.
Many organizations want to set up local production units in China due to low-cost labor. Apart from this, sourcing various forms of raw materials and equipment are reasonable compared to other nations. So companies favor investing in China. Moreover, the sources offered in China are incredibly competitive such as global support and analysis and growth possibilities. All the above incentives are given to investors who want to build a business in China.
The most reliable way to begin a company in China is through an Umbrella Company. An Umbrella company is an authorized entity that operates like your host in China. It takes care of your employees or procedures(usually your sales/marketing/import-export etc.) in China. Incorporating an umbrella company is exceptionally cost-effective and is one of the best ways to start a business in China.
WHAT ARE THE VARIOUS BUSINESS ENTITIES IN CHINA?
There are four varieties of business entities in China, viz.
1. Wholly Foreign Owned Enterprise (WFOEs) is a limited liability company. In certain companies, all the shareholders can be foreign people. However, only International business companies or foreign people can be the shareholders in these companies, and a Chinese assistant is not compulsory.
WFOE is the most suitable investment vehicle if the investor plans to get into China’s manufacturing or processing business. Owning paid-up capital is not essential for building a consulting, trading, or IT firm in China. International companies are planning to market their products in China or get high-value goods that generally favor a WFOE. This is to obtain any infringement of rational property that has already been cast out of China.
WFOEs can work within a limited licensed business ambit, which is mentioned on the business license. However, further approvals from the authorities are required for changing the scope of business of WFOEs. The most common companies include investment consultancy services, manufacturing, trading, retail, etc.
Generally, a manufacturing WFOEs is 15-30 years which can be easily extended based on prior permission from the government. However, the WFOEs term is increased to 50 years if the company has:
The Corporate taxes in China are different from 15% – 25%, depending on the company’s administration and the type of business. It is necessary to submit tax records to the Tax Administration Department annually. The cost of a yearly audit report in China is about RMB 6,000, and if the identical is not submitted, the company will be subjected to a fine. The organization can immediately repatriate the profits. Although a business wants to pay the profits out of the country, then the permission of the State Administration of Foreign Exchange is not expected.
The registered capital is the amount necessary to conduct any business until it reaches the break-even point. For example, a WFOE runs with a registered capital until it has its own cash- flow.
Minimum Registered Capital Requirement
Advised Registered Capital
2. Foreign-Invested Commercial Enterprise The regulations for Foreign-Invested Commercial Enterprise registration in China is relatively easy. These enterprises are established to retail, wholesaling, franchising, or trading business in China.
The minimum registered capital requirement –
3. ROs (Representative Offices) in China Representative offices work for business analysis activities and get the scope and extent of the Chinese Market for future ventures. They cannot perform any business for profit-making. They cannot sign agreements on behalf of the parent organization, receive any funds, issue valid tax invoices, deal with a property, or import production equipment. They also cannot recruit any staff themselves and require to seek the advice of an HR agent who the Chinese government appoints for recruitment purposes. In the case of a foreign employee, he/she is required to file with the local Social Security Authority within 30 days of employment.
Elected offices in China are responsible for paying taxes on all the charges acquired by them. It covers the salary of the staff and office rents. Approximately 10% of the total amount is payable as tax. A regular report of the same is presented to the Chinese Tax Administration Department.
4. Joint Ventures Company Joint Venture is an association of both domestic and international existences. It is ensured by both foreign and Chinese partners and is built for the purpose of the transference of technology.
Eligibility Criteria for Company Registration in China
An applicant applying for the process of company registration in China has to fulfill the following ability criteria:
- Minimum Directors – The company must have a least of 3 to 13 directors.
- Deputy Chairman and Chairman – The Company must have one deputy chairman and chairman.
- Enrolled location for Business – The Business must have a listed address for conducting a business in China.
- Legal Representative – A legal representative must be equipped in China to carry out the procedure related to company registration in China.
- Reserved Name – Aside from this, the name of the organization must be reserved.
Steps for Company Registration in China
The following are the steps that need to be followed for company incorporation in China.
• Application Submission: Submitting a request to the company registrant’s authority to register the company.
• Company Registration: The company is enrolled with State Administration for Industry and Commerce (SAIC) and the MOFCOM (Ministry of Commerce) as a Limited Liability Company. If the request gets denied for non-fulfillment of several conditions, the applicant can investigate the status of the demand for the authorities.
• Business license: After the registration is finished, the business license is allotted to the person. Both the dates, i.e., the company set up and the business license, are the same.
• Creating Company Stamps: Once the license is obtained, it is essential to create the business chops as they are used on all official certificates. For filing, a company stamp, document of approval, and business license are obliged.
FAQs on Company Registration in China
The cost differs strongly per investor and depends on the type of business you look to set up, the location, the number of employees needed, etc.
Yes. The foreign-invested companies require establishing at least two bank accounts in China: a foreign currency capital contribution account and an RMB basic account. The foreign currency capital contribution account is required to receive the certified capital injection from foreign investors, and the RMB basic account is used for daily business transactions in China.
All authorized registered companies can be found and established on National Enterprise Credit Information Publicity System.
Yes, the government imposes restrictions on foreign investment in China.
First and foremost, the candidate seeking certification must take a proper representative to obtain the process seamlessly. After this is carried out, the candidate would have to save the name of the company. Then, all the certificates have to be prepared, and an approval certificate is needed.
Yes, it is compulsory to carry out the compliances such as registering information. This is a crucial step that has to be carried out by the applicant.
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