How to register a company in China as a foreigner

thumb image

by bizboon

February 11, 2015

How to register a company in China as a foreigner

As the world’s most populous nation, with more than one billion people, China is one the biggest economies and also the fastest growing economy in the world. The robust growth achieved by China over the last couple of decades and the country’s entry into the World Trade Organization (WTO) in 2001 have come a long way in luring the business owners and investors to set up businesses in the country. Coupled with this the Chinese government also entices foreign companies to invest in the country with tax and tariff incentives, as well as subsidies and administrative convenience. Today many US companies generate a large chunk of its global revenue in China. Lots of other global companies do good business in China.

As a consequence of China’s commitment to WTO, many new regulations have been initiated with the aim of liberalizing China’s different sectors for foreign companies operating in China.

The findings of the latest survey conducted by the UOB Asian Enterprise Survey have revealed that China is the top destination for business expansion by Asian enterprises. This is due to the presence of a large and expanding middle-class consumer base and the country’s ability to offer low cost manufacturing. And China abounds in both.

Today, thanks to growth of its economy during the past few decades China has developed a reputation as a country where foreigners could launch their business, possibly even faster than at home.

However, a question that is uppermost in the minds of the foreign investors who are willing to do business with China is: “how to register a company in China as a foreigner?”

While establishing a business in China, the foreign investors will do it well to remember that they would be always under a microscope. The treatment of the foreign companies is different from that of the domestic companies. Favoritism is shown to the domestic players in China.

Registering a company in China as a foreigner is a challenge. But it is everywhere. Opening a company in China has been a bewildering experience for foreign investors due to prevalence of complex licensing procedures in the country. However, economic reforms initiated by the Chinese government have created a more favorable regulatory environment for company registration in the country.

For foreign investors who are willing to find an answer to the question: “How to register a company in China as a foreigner?” it is to inform them that they can generally form a company in China in one of five ways: Wholly Foreign Owned Enterprise (WFOE); Partnership Enterprise (PE); Representative Office; Joint Venture and Hong Kong company.

One of the most popular ways to set up a business in China by foreign nationals, Wholly Owned Foreign Enterprise, or WOFE contributes a lot to the China’s economic development. As a matter of fact, WOFE is the most appropriate way for those foreign investors who are showing propensity for starting business in China. Foreign nationals can establish WOFE in China upon application and approval.

The cost of production and manpower is low in China which is also witnessing a growing consumer base. This phenomenon provides enormous potential business opportunities in China. Consequently, many foreign business owners look forward to starting business in China to attain an advanced position in the China market.

How to start a small business in China

The small businesses in China play an instrumental role in the overall economy of the country by contributing a large chunk to the country’s GDP. These smaller businesses are important growth engine for the country. The small business sector presents enormous opportunities for entrepreneurship.

The number of small businesses in China is increasing fast. Their growing number is a result of the growing entrepreneurial spirit of the Chinese youth.

The cost of getting a foreign-owned small business approved in China is in fact much higher than it is expected. A business has to run into bureaucracy at every juncture. If you think that it is going to be a smooth ride when it comes to setting up a small business in China, you are living in illusion.

How to start your own company in China

Starting a company in China generally involves more time and more protracted procedures than in the developed economies in the world. As the country is now been universally acknowledged as an economic giant, the country is now luring foreign investors who want to start their own companies in China. To start a company in China, business owners have to file entity formation forms with the appropriate agencies that oversee the formation and registration of companies.

“How to form a company in China?” is the first question that comes to the mind of those looking forward to starting business in China. Forming a company in China is the first step in the direction of starting business in China. Forming a company in China using the wrong procedures can result in the collapse of your company in future.

In China a foreign can have a hundred percent foreign company ownership.

Obtaining foreign company registration in China
A foreign business owner has to complete an application form to secure their foreign company registration in China. Necessary documents that are required in obtaining foreign company registration in China include registration application form.

International business in China

The foreign enterprises looking forward to starting business in China need to follow some rules and regulations. Banking is a key tool for running your business China. When it comes to international business in China, a foreign national needs to set up the required bank accounts in China. The banking accounts for international business in china consist of a capital account, a basic account, and a general account. This will allow the foreign enterprises to do business with the Chinese clients with ease.

By setting up a business account in China foreign business owners can avoid the hassle of foreign currency and exchange rates. A personal account cannot be turned into a business one. Even if you are the only person in your business it is strongly recommended that you should have a business account. This will stand you in good stead in managing company’s cash flow.

A word of Cautions for Business Investors

Those thinking of starting business in China should do well to known that laws and regulations in the country change at a rapid pace. It is also pertinent to note that these regulations may vary from one place to another place. Hence you are advised to check for the latest information.

The Benefit of starting business in China

After expanding in the European and the US markets, the world’s top companies are now making their way into the Chinese market. The benefits of starting business in China are many.
By virtue of its being the fastest growing economic power in the world, China is fast emerging as a famous investment destination for foreign business owners. Today, China is among the top exporters in the world and attracts record amounts of foreign investment. The country is getting more and more into the attention of the investors from across the different parts of the world.

Today, both foreign individuals and companies can look forward to starting business in China. Many foreign investors are willing to starting business in China which is one of the top destinations for investment. If the country manages to relax some restrictions on foreign investors, it will be for the mutual benefit for both the country’s outbound and multinational inbound investors. For example a BIT treaty with China will allow the US firms to operate in several industries and sectors which are till now inaccessible the US firms.

Opening a business in China requires patience and persistence. It won’t be a smooth ride if you are going to open a company in China. On the contrary, the whole exercise might be irritating. But once you’re done setting up a business in China, in all likelihood you will be making a lot of money and enjoy doing business with the country.

In China, some businesses are still inaccessible to the foreign nationals. However, the Chinese government is working fast to lift some of the restrictions imposed on the foreign investors.
While doing business in China, it is incumbent on you to go a lot of homework and figure out who might be the right people to deal with.
In the final analysis, it can be said with absolute certainty that starting your own business in China brings numerous benefits. Its status as an economic superpower lures the business owners across the world to develop and expand their venture. As a matter of fact, the sheer volume of new business opportunities in the country to help the business owner set up a new business entity in China is simply great.