Company registration in China

China is one of the key players in the international market. The economy of this country is characterized by rapid growth and diversification trends. In addition, China is home to important financial and manufacturing centers. Therefore, investing in a business in China, whether in Beijing, Shanghai, Guangzhou, or another major city, is advantageous.

Why it’s worth registering a business in China

The decision to open a company in China has the following potential benefits:

• economic and political stability;
• the openness of the large Asian market;
• interest in foreign capital;
• highly skilled labor force, the involvement of which is not associated with high costs;
• high level of protection of property;
• availability of incorporation of new business in a remote format;
• availability of free economic zones;
• well-developed infrastructure.

Organizational and legal forms in China

If you are considering registering a company in China or establishing your presence in an alternative way, the following methods are available for this task:

• Limited Liability Company – the most popular option among foreign investors, which implies limited economic and legal responsibility for the results of the company’s operation in China. Even one residency participant can establish a legal entity of this type. Regulatory requirements for start-up capital for this company are not provided.
• Branch – the option is suitable for non-resident legal entities, which aims to simplify the interaction with local counterparties and customers—the procedure for setting up a branch is more straightforward than a limited liability company. No start-up capital is required. The non-resident parent company will always be 100% responsible for the branch’s operations.
• A representative office is also a simplified option for a foreign company to establish its presence in China, but this option does not involve the right to conduct business. A representative office can conduct market research or promotion of goods/services. The parent company will always be fully responsible for the results of its activities.

How to register a company in China

The process of incorporation of a new legal entity in China includes the following stages:

1. Formation of the list of activities the Chinese company will engage in.
2. Drawing up an individual business plan will help an investor justify the need to set up company China. This business plan should contain information on the budget, goods/services, estimated number of employees, and expected income.
3. Formulation of a unique business name for the future company.
4. Collection of mandatory information on shareholders, including the parent company (if any), beneficiaries, and managers of the future Chinese company.
5. Legal formalization of the official address for the Chinese company.
6. Drafting, execution, and certification of all necessary incorporation documents and application forms.
7. Submission of documents to the Ministry of Commerce and State Administration of Industry and Commerce.
8. Submission of application for a business license according to the chosen activity.
9. Making a seal for the new Chinese company.
10. Registration of Chinese companies for tax and social payments.
11. Opening of corporate bank accounts.

Legislation and regulatory environment

There are no restrictions on foreign investors in China – 100% foreign ownership is allowed. However, registration procedures require excessive bureaucracy. In addition, most business activities require a license. Prifinance lawyers can help you develop a customized plan to enter the Chinese market.

Taxation in China

Before registering a business in China, it is essential to evaluate the following intricacies related to taxation in the country:

• Income tax (for companies) – 25%
• Income tax (for individuals) – 45%
• INCOME TAX – 6, 9, 13%
• (1) Dividend tax – 10% (2) Interest – 10% (3) Royalty – 10%
• Capital Gains Tax – (1) corporate – see corporate tax (2) individual – 20%.

How Prifinance specialists can assist

If you plan to register a business in China, Prifinance lawyers can utilize their extensive expertise to help you accomplish this task. In addition, they can assist you with various aspects of business registration and support, including:

• evaluate the option of business registration in China in terms of your experience and business tasks, develop an individual plan for new business incorporation in China;
• require, draw up, and properly execute all necessary incorporation documents and application forms;
• undertake negotiations with all government authorities on business support in China, as well as bank representatives;
• provide comprehensive legal support for the further operation of the new enterprise.

With over 11,000 successfully completed company registration cases worldwide, the experts at Prifinance have the necessary experience to support your business to achieve maximum benefits when registering in China.