DOING BUSINESS IN CHINA

The global economy has shifted significantly post-pandemic, with growing domestic demand for foreign products and expertise, now is the perfect time to establish or expand your presence in the Chinese market. Entering 2024, China’s economic reforms and new policies have made the market more mature and accessible, aligning closely with Western practices and presenting unique growth opportunities.

However, navigating China’s tax and regulatory environment can be challenging. Ensuring compliance from the start is crucial to mitigate risks and maximize efficiency. Outsourcing these tasks to a trusted third-party service provider can streamline the process.

Entity Types in China:

* Wholly Foreign-Owned Enterprise (WFOE)

- Most common for foreign investment

- Can hire local and expatriate employees

- Can engage in commercial business activities according to their business scope

* Joint Ventures (JVs)

- Shared ownership between two or more parties

* Equity Joint Ventures (EJV): Share risk and return based on ownership

* Cooperative Joint Ventures (CJV): Share risk and reward based on contract terms

* Representative Office (RO)

Extension of overseas entities, not legal entities in China

Liaise with local parties, coordinate promotional activities

Cannot engage in commercial business

Hire employees through third-party HR agents

Taxed based on costs, not revenue

Business Scope

Defined by the business and approved by the State Administration for Market Regulation (SAMR)

Determines legal business activities and VAT invoice capabilities (fapiao)

Create an exhaustive list of desired products and services

Align descriptions with official Industry Classifications

Business activities classified as “Prohibited,” “Restricted,” or “Encouraged”

Registered Capital

Under the amended Company Law, shareholders of limited liability companies must pay their subscribed capital within five years of the company’s establishment. Companies established before the new law takes effect will have a three-year transition period to comply with the new registered capital requirements in China

Company Setup Process

Step 1: Pre-setup preparation

During the pre-setup, we will help you select a Chinese name for your new business as well as draft all the necessary documents necessary for the application. Documents required vary depending on the legal entity type and the shareholders involved. We pre-screen all documents and application details to ensure you can get on with your business as quickly as possible. For a detailed list of documents required, please contact us for a free consultation.

Step 2: Application Process

Establish a business happens in two phases. First, the business scope must be approved by the Ministry of Commerce and then the Administration of Market Regulation (AMR) issues the business license. From start to finish, registering a business in China takes roughly 5 weeks.

Step 3: Post-setup procedures

Once the business license has been issued by the authority, We will help you complete the following procedures:

- Carving the company seal (aka. Chop / Chomp)

- Opening a company bank account

- Apply with the tax authorities

- Apply with the social security bureau

- Apply with the customs authorities (if applicable)

- Obtaining special licenses (if applicable)

- Application for an expatriate employment permit (if applicable)

In addition to business setup, completing all of the necessary procedure above takes between 2-6 weeks, depending on the tax registration status and other factors. Once completed, the business can commence its operations including hiring employees, making and receiving payments, and issuing invoices.

Step 4: Monthly, Quarterly and Annual Compliance

All businesses in China are required to meet monthly, quarterly, and annual compliance requirements, regardless of if they had any turnover. Integra Group provides flexible bookkeeping and compliance services to help you meet all your compliance requirements.