Shenzhen (深圳) is one of China’s most dynamic business hubs, offering a strategic gateway for foreign investors due to its proximity to Hong Kong and its role in the Greater Bay Area. Setting up a company in Shenzhen involves several legal steps, including compliance with Chinese corporate laws and regulations. We share with you how to establish a business entity in Shenzhen, incorporating essential legal terms and Chinese terminology.
1. Choose the Right Business Structure (企业类型)
Foreign investors have several options when establishing a company in Shenzhen. The most common types include:
- Wholly Foreign-Owned Enterprise (WFOE) 全外资企业 (Quán wàizì qǐyè): A limited liability company wholly owned by foreign investors, providing full operational control.
- Sino-Foreign Joint Venture (JV) 中外合资企业 (Zhōng-wài hézī qǐyè): A partnership between Chinese and foreign entities.
- Representative Office (RO) 代表处 (Dàibiǎochù): Suitable for market research and liaison but cannot engage in profit-making activities.
- Foreign-Invested Commercial Enterprise (FICE) 外资商业企业 (Wàizì shāngyè qǐyè): Allows foreign firms to engage in trading, retail, and wholesale businesses.
2. Register a Chinese Company Name (公司名称注册)
A company name in China must follow a strict structure:
- Administrative region (地区) – e.g., Shenzhen (深圳)
- Brand name (商号)
- Industry descriptor (业务范围)
- Company type (公司类型) – e.g., Limited Company (有限公司)
Example: Shenzhen XYZ Technology Co., Ltd. (深圳XYZ科技有限公司)
Company names must be approved by the Shenzhen Administration for Market Regulation (AMR) (市场监管局).
3. Prepare Incorporation Documents (创立文件)
The following documents are required for company registration:
- Passport copies of shareholders and legal representatives
- Articles of Association (立业法) detailing business scope and structure
- Registered office lease agreement (租赁合同)
- Capital injection proof (资金证明)
- Legal representative’s appointment letter (法定代表人授权书)
These documents must be notarized and legalized at the Chinese Embassy or Consulate (中国领事馆) if issued overseas.
4. Obtain a Business License (营业扩充证)
Submit the required documents to the Shenzhen Administration for Market Regulation (AMR) (市场监管局). Upon approval, you will receive a Business License (营业扩充证), which includes a Unified Social Credit Code (统一社会信用代码).
5. Obtain Company Seals (公章制作)
Official company seals (公章) are legally binding in China. These include:
- Company seal (公司章): Used for contracts and official documents.
- Financial seal (财务章): Required for banking and financial transactions.
- Legal representative seal (法人章): Used by the company’s legal representative for official purposes.
6. Register for Taxes (税务登记)
Companies must register with the Shenzhen Tax Bureau (税务局). Key taxes include:
- Corporate Income Tax (CIT) 企业所得税: Standard rate of 25%, with incentives reducing it to 15% for high-tech enterprises.
- Value-Added Tax (VAT) 增值税: Ranges from 6% to 13%, depending on industry.
7. Open a Corporate Bank Account (开编公司银行账户)
Select a local or international bank (e.g., ICBC (工商银行), Bank of China (中国银行), HSBC (求业银行)) and submit the required documents, including the company’s business license and company chops. Damalion can guide to open a business bank account locally.
8. Register for Social Security (社保编号注册)
Employers must register their employees with the Social Security Bureau (社保局) and contribute to:
- Pension (兵骨金)
- Medical insurance (医疗保险)
- Unemployment insurance (失业保险)
- Work injury insurance (工伤保险)
- Maternity insurance (生育保险)
9. Comply with Ongoing Regulatory Requirements (法律负担)
- Submit annual reports to AMR.
- File monthly and annual tax returns (税务报表).
- Renew business licenses and permits as required.
Shenzhen offers an excellent environment for foreign businesses, but understanding the legal and regulatory framework is crucial. With proper registration, tax compliance, and corporate governance, businesses can thrive in one of China’s most vibrant economic zones.
Damalion supports international entrepreneneurs to setup their Wholly Foreign Enterprises in China. Please contact your Damalion expert now.
