What is the process for registering a Chinese company as a foreigner? (2024)

• With a GDP of roughly USD 14 trillion, China is regarded as having the second largest economy in the world which is why more and more international investors are becoming interested in expanding their businesses there. As a result, China is recognized as a country with expanding commercial potential. As the government encourages foreign investors to start businesses in China, the country also builds a business-friendly atmosphere.
• Hence, without a question, China has become a major economic powerhouse and a haven for investors. It offers the best starting point for companies wishing to invest internationally. Additionally, a Chinese registered corporation allows you to access a wider market with the assistance of a supportive government. However, you need first be aware of the procedure to register company in China before commencing your business operations there.
• In this article, Tetra Consultants has outlined the process for registering a company in China specifically for foreigners looking to invest in the country.

Process to register company in China

1. Determining the type of business structure:

• Prior to the incorporation process, you must first decide on a suitable legal entity for your business. There are different types of company structure available in China to choose from. The most common and preferred structure by foreign investor are as follow:
• Wholly Foreign-Owned Enterprise (WFOE): WFOE is the most preferred option by foreign investors who wish to start a business in China. WFOE is a limited liability company (LLC) that is fully owned by foreign investors. As a LLC, it means that it is a separate entity with limited liability limited to its contributed share capital. Owners have the authority and control over the decision-making of the company.
• To register a WFOE, at least 1 investor (from any country except China, including Hong Kong, Macau and Taiwan regions), 1 director or a board of directors in which the investor can also be the director, 1 legal representative, 1 general manager, 1 supervisor, and a registered company address is required.
• While there is no minimum registered capital required. The business is allowed to engage in activities for which it is registered for. By setting WFOE in the Shanghai Free Trade Zone, investors can enjoy a shorter and more simplified procedure to register business in China.
• Joint Ventures (JV): JV is a special form of business registration with a requirement of a partner who is a resident of China. This partner is required to have controlling shares of over 50% of the company. Unlike WFOE, you will have lesser authority and control over the business operations of the company.
• With JV, it is easier to expand your business into the Chinese market by using the pre-existing knowledge of established firms, their distribution networks and sales channels. There are 2 types of JV namely Equity Joint Ventures (EJV) and Cooperative Joint Ventures (CJV).
• Equity Joint Ventures (EJV) is a form of LLC where it is a separate entity with limited liability limited to its contributed share capital. Cooperative Joint Ventures (CJV) is a Sino-foreign joint venture where companies in China would often provide labour, land use rights and factories. Whereas, the foreign companies will bring in the required technology, key equipment and capital. There is also no minimum foreign investment required.
• Representative Office (RO): RO is the simplest type of business formation where it is formed by a foreign enterprise and is not a legal entity in China. The operations are conducted in China on behalf of the foreign parent company. Unlike WFOE and JV, RO only allows engagement in non-profit-making areas.
• Tetra Consultants will understand your business activities, requirements, and long-term business goals before recommending a suitable business entity for you. We will also inform you have the regulatory requirements of the chosen business entity, minimum paid-up share capital you must invest, and more.

2. Fulfilling the pre-registration requirements:

• You will need to have a registered office address for your business. Tetra Consultants will assist you in obtaining a suitable address as per the government regulations.
• Tetra Consultants will check for the availability of your preferred business name and reserve the same with the Administration of Industry and Commerce. The chosen trade name must be unique and display the core activity of the business.
• Tetra Consultants will also assist with the provision of a company secretary or legal representative who can act as the representative of your entity during the registration process or during the fulfillment of annual compliances.

3. Preparation of registration documents:

• To further the process of company registration in China, you need to collate the KYC documents of prospective director, shareholder and beneficial owners and prepare the corporate documents including the Articles of Association. Once the articles is prepared you can proceed to notarize the same with the respective public notary.
• Tetra Consultants legal team can assist with the preparation of drafting aforementioned documents. Once drafted, we will provide you the prototype for your review and comments on the same.

4. Registration of the company:

• After preparation of the Memorandum and Articles of Association, you may proceed to file your application with the Ministry of Commerce (MOFCOM).
• After review by the relevant authorities, you will be notified if the certificate has been approved or denied. If approved, you will be issued with an approval certificate and operating license.

5. Post-registration requirements:

• You may apply for a “5 in 1” business license from the local Administration of Industry and Commerce (AIC). The application covers the main business license, tax registration certificate, organization code certificate, social security registration certificate, and statistical registration certificate.
• Further, in order to get company chops that are used to validate contracts, you will have to register with the Public Security Bureau (PSB).
• As a foreign investor registering a wholly foreign owned enterprises requires minimally two accounts, a local currency account and a capital contribution account. Tetra Consultants banking team can assist with the corporate bank account opening process for your entity. You can leverage on our vast banking network to successfully open a corporate bank account with local or internationally reputable bank.

Conclusion

• The process of company formation in China may seem intimidating. If you wish to start a business in China but are unsure what to do, you may engage the service of Tetra Consultants. With Tetra Consultants by your side, the registration process of your business in China will be smooth and hasslefree. Our comprehensive service package includes planning and strategizing with our clients to select a suitable business entity, completing the registration process, obtaining required licenses, opening a corporate bank account, and ensuring your compliance with the government regulations.
• Contact us to find out more about how to register business in China and our dedicated and experienced team will revert within the next 24 hours.