Company Incorporation In China
Looking to Incorporate a company in China?
In order to establish a legal entity in China rapidly and in compliance, Corecentric offers end-to-end expansion solutions to our clients. Our team of experts possesses a deep grasp of the Chinese market and can provide guidance to help your firm traverse the international market.
5 reasons why you need to do business in China
Booming Economy
One of the key success factors of doing business in China is its economy’s potential for growth and development. The country’s economy is still growing at an incredible pace and is expected to overtake USA’s GDP after 2030, although Covid19 has sped up this timeframe. Sources now estimate that China will surpass USA between 2026 and 2028. The opportunities in a developed country with such economic growth are tremendous coupled with the physical and technological infrastructure present on the ground for companies to take advantage of.
Increasing Spending Power
China’s consumer market is the fastest growing in the world. China’s retail annual growth rate is expected to grow at a 10% compound annual growth rate until 2025. In 2021, the average disposable income of Chinese families rose by 13% over the previous year, clearly demonstrating that China’s consumer spending is still going strong, especially in the retail industries.
Low-Cost Country
While China’s minimum wage and working standards have increased through the years, China is still cheaper than most developed countries when it comes to the manufacturing industry, specifically the cost of manufacturing a product. China is no doubt a manufacturing powerhouse and has gained the title of being the world’s factory not only because of its low costs but also its robust business ecosystem, low taxes, and competitive currency practice.
Highly Skilled Workforce
Not only are its local universities producing millions of skilled talents who are entering the workforce every day, China has also made it easy for international graduates to settle and work in the country. Ever since the Chinese education system incorporated English as part of the kindergarten curriculum, many Chinese are now able to converse in both English and Mandarin. Hence, businesses expanding into China will now be able to tap into a large pool of highly qualified English-speaking young professionals that are able to communicate with an international audience.
Favourable Government Policies
The Chinese government has been very proactive in enforcing entrepreneurially supportive measures for both local and international companies. Some of these measures include helping young people to incubate their ideas, supporting creativity and innovation, and giving companies subsidies to finance their businesses. These measures make China great for both local and foreign entrepreneurs to start and grow their operations in the country.
Which type of company should I register?
A Wholly Foreign-owned enterprise (WFOE) is the most popular business structure amongst foreigners looking to start a business in China. According to Chinese law, WFOE is a limited liability company that is 100% owned by a foreigner or run by a foreign company. Since you fully own the business, it implies that you have greater control over its operations, profit targets, and revenue. As a limited liability company, it also means that it is a separate legal entity and thus limits your liability to the contributed share capital.
The following summarises the advantages of a Wholly Foreign-Owned Enterprise.
- The business is allowed to engage in all activities it is registered for in China.
- You have total control over the decision-making process of the company.
- It is the perfect way of protecting your trademark when expanding your operations to China.
- You have total control over staff employment and deployment.
- It is ideal if you plan to establish a long-term presence in the country.
How do I register a company in China?
Step 1 : Get an agency to help you with the whole process
The process of incorporating a company in China can be rather daunting, having to interpret Chinese company laws and manoeuvre through the many legal processes. However, this should not dampen your spirits to start a business in China. Instead, work with a reputable agency to bring you through the entire process of company incorporation. Corecentric has many years of experience helping companies expand their business operations overseas, China included. Let us walk you through the different stages so you can have your business up and running in no time.
Step 2 : Reserve your company name
Prior to company registration and formation, you will have to decide on your company’s name, business activities, paid-up share capital and corporate structure. To reserve your preferred company name, Corecentric will help to register with the local Administration of Industry and Commerce.
Step 3 : Prepare the required documents
- Memorandum and Articles of Association – The document outlines the core details of the business, including the business scope, managerial structure and the methods used for returning profits.
- A feasibility study – This document will detail the company’s business plan and budget.
- Local Registered Address for legal correspondences.
- List of controlling partners and managerial structure
Corecentric will assist in the drafting of the Memorandum and Articles of Association, business plan and budget feasibility. We will provide a registered address necessary for company incorporation and compile all documents for submission. If required, Corecentric can also provide translation services for the above documents.
Step 4 : File for registration
Once all the documents are ready, Corecentric will begin to file for registration with the Ministry of Commerce (MOFCOM) and the State Administration of Industry and Commerce (SAIC) who will issue the approval certificate and operating license.
Upon approval, Corecentric will courier all documents to your preferred address including the Certificate of Incorporation, Memorandum and Articles of Association, China company registration certificate and other legal and corporate documents.
Step 5 : Apply for business license
Our team will proceed to apply for the ‘5-in-1’ business license which will include a/an:
- Business license relevant to your industry
- Organisation code
- Social security registration certificate
- Tax registration certificate statistical registration certificate.
Step 6 : Secure a company chop
After successfully incorporating your company, Corecentric will help to register with the Public Security Bureau to secure a specialised chop/stamp for your business. This is necessary to authorise all contracts and legal or corporate documents in China.
Step 7 : Open a business bank account
For your business to start operating, you will have to open a corporate bank account in China. Corecentric will assist in the bank account opening process. Having established partnerships with reputable banks in China, Corecentric is able to help speed up this process.
Opening of a business bank account can be done virtually and remotely. Once the account is opened, Corecentric will courier the internet banking token, corporate card and access code to your preferred address.
Step 8 : Register with the Tax Bureau
All companies in China are required to comply with tax regulations. On behalf of your company, Corecentric will register with the Tax Bureau and obtain CFO verification.
Step 9 : Meet financial reporting & taxation obligations
Engage our team of accountants to help you meet financial reporting and taxation obligations. We help to manage your books, prepare financial statements and management reports and file corporate tax returns so your company can remain compliant.
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