China business setup procedures include several steps. As the largest market in the world by the size of its population, the People's Republic of China is an attractive place for business setup by foreigners. Doing business in China offers many benefits, not only because the country is a manufacturing paradise, but also because of its low business costs. Below are the brief procedures for business setup in China.
1. Choose entity status
Before register with the government, it is require deciding what type of business entity to register. Set up China Company can be divided into five forms, which are Wholly Foreign Owned Enterprise (WFOE), Representative Office (RO), Equity joint venture (EJV), Co-operative joint venture (CJV) and Foreign Investment Enterprise (FIE).
2. Select Location
It is necessary to know the big cities. Shanghai, Beijing and Guangzhou for example are the major business, government, and industrial centers. China abandoned its preferential tax rate for investments of foreign companies. However, some areas still offer local preferential policies for foreign investors in terms of land leasing/procurement, staff recruitment and management, local tax etc.
3. Confirm the minimum registered capital
The Chinese government requires certain minimum registered capital for various types of businesses. However, local Industry and Commerce Administrations may decide minimum registered capital based on their judgment of the business scope and operation scale.
4. Provide proof of ownership
Many investors create special purpose companies to serve as the investor in China. China's company regulators have become accustomed to this process. However, the Chinese regulators will often still seek to trace the ownership of the foreign investor back to a viable, operating business enterprise.
5. Prepare the necessary documents
The investor in/owner of the WFOE must provide the documentation from its home country proving it is a duly formed and validly existing corporation, along with evidence showing the person from the investor who is authorized to execute documents on behalf of the investor. The investor also must provide documentation demonstrating its financial adequacy in its home country. All the documents must be prepared in Chinese.
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