China is one of the key global economic leaders. The country has opened its market to global trade and its economy has profoundly transitioned from being agriculture-dependent to tech-driven.
Starting with its economic development in the 70s, the country has been experiencing outstanding growth that makes it an excellent launching pad for businesses that want to develop and invest globally.
To exploit this tested and proven investment destination, you need to follow the right steps for China company registration.
Forms of enterprises for foreign companies in Mainland China
There are three main business formation options that you can use in China:
- Wholly Foreign-Owned Enterprise (WFOE)
The prominent business structure for foreigners looking forward to starting businesses in China is a WFOE. According to Chinese law, WFOE is a limited liability company that is 100% controlled by a foreigner. Since you completely own the business, it implies that you have considerable control over its operations, profit targets, and income.
- Joint Ventures:
A joint venture is another type of business that takes the feature of a limited liability company. Under this business structure, you are required to identify and register a company with a Chinese partner. Another thing about Joint Ventures is that the Chinese partner must have controlling shares in the company. This signifies that, unlike the 100% foreign-owned enterprise, your partner will have considerable control of the daily operations of the company.
- Representative Offices:
This is the easiest type of business formation that you can open in China. But unlike a WFOE or joint venture, a representative office comes with major restrictions. The office is only enabled to engage in non-profit making operations such as giving customer support and market research.
The Procedure for China Company Registration
The best legal company formation in China is a WFOE. A WOFE can be capitalized by foreign investors and operated without the need for Chinese partners. It will give you greater control over your business’s operations, income, and profit targets.
Since a WOFE is the closest you’ll get to entirely establishing a business in China, outlined below are the steps you’ll need to take to register one.
- Select your business category and scope
The first task in your company registration is defining your business category and scope. This is crucial, as you’ll need to register your company within a certain category so that it can be correctly regulated.
- Prepare the necessary documents
To get approval for your WOFE, you’ll need to be able to deliver extensive documentation to support your application. This will include:
- Certificate of Incorporation,
- Copies of the passport of each investor,
- Bank statements from each investor,
- Copies of the passports of the parent company’s director, the Chinese company’s legal representative, and the Chinese company’s CEO,
- Photos of the Chinese legal representative, along with a CV,
- Proof of registered capital to meet the WOFE requirement,
- Documentation pertaining to business scope and category,
- The company address,
- Documentation relating to ownership or lease agreement of Chinese address,
- Letter of authorization
- Feasibility study that summarizes why and how the company will succeed
- Articles of association that define company regulations, managerial systems, and financial management processes.
- Apply for an approval certificate
When you’ve got all your documents in order, it’s time to apply for an authorization certificate from the Ministry of Commerce and the State Administration of Industry and Commerce.
- Apply for a business license
After you’ve received authorization from the pertinent bodies, you then have 30 days to register for a business license from the Chinese Administration for Industry and Commerce. This is required before you can start operating in China.
- Register with the Public Security Bureau (PSB)
Registering with the Public Security Bureau will give you your company chops, which is a necessary stamp that replaces signatures on any business contracts in China.
- Open a Chinese bank account
Once you have gotten the business license and company chop, you’ll then be eligible to open a Chinese business bank account for your company. You’ll require this to get paid and to be able to pay any bills.
- Register at the State Taxation Administration (STA)
The last phase of setting up your WOFE in China is registering with the State Taxation Administration to comply with tax regulations and file the essential tax returns in accordance with the law.
Registering a company in China is a monumental task. Therefore, it is a great idea to have an expert holding your hand all the way. Whether you are interested in creating a WFOE or want to establish one of the WFOE substitutes, let’s go ahead together and contact your Damalion expert now.
