A Comprehensive Guide to Opening a Business in China 

Are you thinking of opening a business in China? If the answer is “yes,” it is likely to be one of your best decisions ever. In the last few decades, China has emerged as a business hub where entrepreneurs take their business and launch them to global status. From a stable social and economic system to supportive administration, China has everything that you need to propel your enterprise to success. However, you need to start by registering your business in China. This post brings out the ten main steps of registering a company in China

China has also installed an elaborate system to help it fight the COVID0-19 pandemic. Since the breakout of the pandemic in March 2020, China excellently locked Wuhan and embarked on a journey to slow down and finally eliminate the disease. Since the outbreak, the disease has spread globally, reaching almost all countries and infecting more than 12 million people by July 2020.

The Main Types of Business Formations in China

Before commencing the process of registering a company, it is important to start by determining the different company formations. Here are the main ones and their characteristics: 

  • Wholly Foreign-Owned Enterprise (WFOE)

As the name suggests, this business format allows you to own 100% of the shareholding. It is the most preferred form of business when moving to China because it gives you the autonomy to make all the decisions. 

  • Joint Venture

Unlike a WFOE that allows you to own 100% of the shares, a joint venture requires you to enter into a partnership with a local Chinese. Furthermore, your Chinese partner like Hawksford is required to hold the controlling shares (50+) in the business. This means that your Chinese partner will have greater control over the business decisions.

  • Representative Office

The simplest form of business to open and operate in China is a Representative Office (RO). Note that this form of business is considered part of the parent company back at home, and it is not allowed to engage in commercial activities. Most companies that open RO use it for non-commercial activities such as market surveys. 

The Five Steps to Opening a Business in China

The process of registering a company in China is quite lengthy and involves dealing with a number of departments. So, here are the main steps that you need to follow: 

  1. Select a Good business center. The goal is identifying a business or industrial hub that allows you to optimize production or reach the targeted audience. So, make sure to consider things such as budget, logistics needs, applicable government rules, and transportation. Note that you are required to have proof of lease in order to be allowed to register a company in China. 
  2. Decide the name of your company. This is very important because it gives your business the identity for both registration and operations. At this point, you will also need to pick the right business formation, such as WFOE and Representative Office
  3. Get an approval certificate and business license approval from the State Administration of Industry and Commerce (SAIC), and the Ministry of Commerce (MOC). Once you are issued with an approval certificate, you can go ahead and apply for your business license. 
  4. Get your business trademark. Patents are considered very important in China, and it is almost impossible to operate without one. So, register for one and get additional approval from the Public Security Bureau. At this point, it is also important to open a bank account for your enterprise. 
  5. Register your business with Tax Bureau. Because China puts a lot of weight on tax matters, your company is required to register with a tax bureau before commencing operations. You will also need to hire an accountant to ensure that your books of accounts and filling of financial returns done correctly. 

From the above steps, it is apparent that the process of registering a company is pretty lengthy and time-consuming. So, you should consider identifying a good agency and work with its professionals to help you with company registration in China