How can a foreigner register a company in China?
As a foreigner, if you’re considering registering a company in China, you’re about to embark on a challenging journey, particularly due to the unique regulatory environment and the booming economy that China offers. However, understanding the legalities and procedures involved can turn this daunting task into a manageable process. Our comprehensive guide actively demystifies this process, equipping you with the essential information you need to establish your company in China.
Just like in any other country, the first step to registering a company in China involves deciding on the type of company you want to register. China allows foreigners to register the following types of companies:
1. Wholly Foreign Owned Enterprise (WFOE) – Operating similarly to an LTD company in many jurisdictions, this limited liability company can register for a variety of businesses, including import-export, consulting, manufacturing, restaurant/café business, gym and fitness, and education consulting. Due to its flexibility, foreign entrepreneurs and companies commonly choose the WFOE. At JR & Firm LLC, we typically recommend the WFOE to most of our foreign clients, unless they have specific reasons to register a different type of entity in China.
2. Representative Office (RO) – Registered under the name of an existing foreign company, this entity isn’t an LTD company. An RO can promote the parent company, conduct market research, sign agreements, and meet with potential clients in China. However, it can’t trade directly with clients, issue invoices, or receive payments. Therefore, we recommend it for companies that wish to conduct market research in China and test the market.
3. Joint Venture (JV) – This LTD company typically forms by two existing companies, which can be both foreign and local (Chinese-owned).
4. Partnership – This entity can be either General or Limited in terms of liability. General partners who bear unlimited joint and several liability for the debts of the partnership can form a general partnership (普通合伙). On the other hand, a limited partnership (有限合伙) forms by a combination of general partners and limited partners, where the limited partners bear the liabilities for the partnership’s debts to the extent of their capital contributions.
After our clients have determined the type of company they wish to register, the next step is to decide on the location of registration. China is divided into 23 provinces, 5 autonomous regions (Inner Mongolia, Guangxi, Tibet, Ningxia, Xinjiang), 4 municipalities (Beijing, Tianjin, Shanghai, Chongqing), and 2 Special Administrative Regions (Hong Kong and Macao, however, from a legal standpoint, companies in Hong Kong and Macao are considered foreign entities in Mainland China). Clients should carefully consider the pros and cons of these regions based on their business plans and decide where to register their company. If you are unsure or indecisive, we at JR & Firm LLC are always available to assist you in this process.
The subsequent step is to secure a name for the new entity in China. As previously mentioned, the names of WFOE companies registered in China include the place of registration, chosen name, business direction, and must end with “Co., LTD”. For instance:
a) Shanghai Silk Road International Trading Co., LTD OR
b) Silk Road (Shanghai) International Trading Co., LTD
(both variations are acceptable)
NOTE: The Chinese name of the company is considered the primary name. The English name can be registered on the company’s official seal and also in the bank, customs, and tax systems, but it will not be included on the business license of the company, which only contains the primary name – the Chinese name of the company.
The name registration process typically takes around 5-7 business days.
JR & Firm LLC is also the proud owner of an international logistics company, JR International Logistics LLC. If you’re seeking a reliable logistics partner to transport your goods from any location worldwide to any desired destination, we invite you to explore our services. Please click here for more information.
Once we register the name, our team at JR & Firm LLC will actively prepare all necessary documents and submit a company registration application on behalf of our clients. At this stage, we need the following documents and information from our clients:
1. Legalized passport copies of all individual shareholders (if they are outside of China during registration) OR legalized company documents of all corporate shareholders (Certificate of Registration, Articles of Association, Shareholders Register, etc.)
NOTE: The Chinese embassy in the country of residence carries out the legalization process.
2. If they are in China, we need copies of passports, visas, and entry/exit stamps of all individual shareholders.
3. We need the appointment of one individual as the company’s legal person (also known as the managing director) and their passport copy (if inside China) or legalized passport copy (if they are outside of China).
4. We need the appointment of one individual as the company supervisor (also known as the manager, cannot be the same person as the legal person of the company) and their passport copy.
5. We need the contact details for all shareholders, company director, and supervisor – full address, emails, phone numbers.
Once we submit the application for company registration, we actively track the issuance of the company’s structural documents by the registrar. This process usually takes around 6-7 days. Upon obtaining these documents, we promptly request our clients to sign them and mail the original signed documents back to us.
NOTE: In China, legal documents must be signed using only black gel pens. Ballpoint or other color pens are not acceptable.
Following the submission of the original signed documents, we eagerly anticipate the issuance of the company’s general business license. This typically takes around 10 business days, but with our expedited service, it can be as quick as 3-5 business days. Please contact us for more details.
As soon as we secure the general business license of the company, we arrange for the company’s Legal Representative (also known as the managing director) to visit China. This visit allows us to open a corporate bank account for the newly formed company. If the Legal Representative is already in China, we liaise with them and the bank to schedule an appointment for opening a corporate bank account. The company’s Legal Representative must personally visit the bank to complete the process, and a representative from JR & Firm LLC will accompany them to assist with the process. The bank account opening process takes 4-6 hours.
NOTE: All banks in China require a second person’s ID (in addition to the company director’s ID) and a Chinese phone number linked to their ID. This second person can be the company’s supervisor (if they are personally present in China) or anyone that our clients choose. The crucial point here is that the second person should be able to provide their government ID (passport for foreigners, ID for Chinese) and their phone number in China.
With the bank account open, we promptly kick-start the process of customs registration. This process typically spans around 4-5 business days, and it does not necessitate the presence of our clients.
Upon the successful completion of the customs registration, we proceed to register the company with the tax office. During this phase, the company’s Legal Representative (also known as the managing director) must make a visit to the tax office for ID verification.
After this step, we take the initiative to apply for a foreign currency permit for the company. This process entails a visit to the relevant government office, which we handle on behalf of our clients. This step usually takes around 1-2 weeks to complete. Once approved, our clients gain the ability to freely receive and send foreign currency payments using their company accounts.
Please bear in mind that this is a broad and simplified overview of the process. As with many procedures in China, navigating government bureaucracy is an inherent part of the journey. Therefore, we kindly ask our clients to exhibit patience with the process and be prepared for flexibility in scheduling, especially concerning bank and tax office appointments.
1. What is the first step if I want to register a WFOE?
The first step towards registering a WFOE in China involves contacting a professional consultancy firm, such as JR & Firm, and signing a service agreement. In theory, the founders could handle the process themselves. However, since it requires an in-depth understanding of the company registration system and proficiency in Mandarin Chinese, it is generally more practical to hire a professional company to prevent potential mistakes during the process.
2. I have signed a service agreement with JR & Firm to register my WFOE, what's next?
After signing an agreement with our clients for WFOE registration in China, we issue a formal invoice. At this stage, we anticipate that our clients will make a payment for the service, allowing us to commence the process.
3. I have paid JR & Firm for the WFOE registration service, what should I do next?
Upon receiving full payment for the WFOE registration, we provide our clients with a detailed questionnaire. This document requests all the necessary information about the company, business activity, founders (shareholders), and executives (including the company director and supervisor). We request that our clients complete the questionnaire and return it to us via email.
4. What should I prepare for the WFOE registration questionnaire?
1. Company Name Choices: In China, WFOE names should follow this structure: [Place of Registration] + [Chosen Name] + [Business Direction] + Co., LTD. For example, Shanghai Silk Road International Trading Co., LTD, or for a consultancy company: Shanghai Silk Road Consulting Co., LTD. An alternative structure is: [Chosen Name] + [(Place of Registration)] + [Business Direction] + Co., LTD. For example: Silk Road (Shanghai) International Trading Co., LTD. Please note, in China, a company’s Chinese name is considered its main name. If our clients know Chinese, we ask for name choices in both Chinese and English, following the above structure. If not, English name choices will suffice, and we will select a corresponding Chinese name based on similar sounds. Avoid city, country, and historical names, as they’re typically disallowed. Also, we discourage direct translations of the English name due to high likelihood of them being taken. We recommend selecting similar-sounding Chinese characters to avoid delays. The Chinese name does not need to have a specific meaning, as meaningful characters are often taken.
2. Company’s Legal Person (Company Director): The legal person is an individual and cannot be a corporate entity. Please prepare their full name (as on the passport), a copy of their passport (not ID), along with their address, phone number, and email address.
3. Company’s Supervisor: The company supervisor is a separate individual from the company director, meaning they cannot be the same person. Please provide their full name (as on the passport), a copy of their passport (not ID), and their address, phone number, and email address.
4. Company’s Shareholder(s): Shareholders are the owners of the company and can be both individuals or corporate entities. Both the company director and supervisor can be shareholders. There can be up to 50 shareholders. Whether an individual or corporate shareholder, full information is required: full names, contact details, address, and either passport copies (for individual shareholders) or a full set of company documents (for corporate shareholders).
5. Company’s Business Activity: What products and/or services does the company plan to sell? Please prepare a detailed list.
6. Company’s Registered Capital: The registered capital is the amount the founders plan to invest in the company over a span of 30 years or more. The amount varies depending on the activity and place of registration. We recommend $300,000 for international trading companies and $100,000 for consultancy companies, as examples. The registered capital amount is usually suggested by the local government.
7. Full Contact Details for All Involved Executives and Shareholders: We need the complete contact details for all executives and shareholders. This includes addresses, emails, and phone numbers.
5. I submitted the WFOE registration questionnaire to JR & Firm via email, what's next?
Once we receive the completed WFOE registration questionnaire, we review it carefully and follow up with our clients accordingly. If there’s any missing information, or if the company requires additional permits or licenses based on its planned products or services, we will inform the client. If everything is in order, we prepare the application documents, attach our clients’ documentation, and submit the WFOE registration application. The estimated waiting period for feedback from the government on the registration application is approximately 10 business days. Please note that timeframes in China are approximate due to government bureaucracy.
6. How long does it take to get my WFOE license after the registration application is submitted?
Once the WFOE registration application is submitted, the government generally responds within 10 business days. If approved, they will issue the company’s structural documents, which the founders (shareholders) and executives (director and supervisor) are required to sign with a black gel pen and mail back to us (Note: In China, only black gel pens are acceptable for signing legal documents; other colors and ballpoint pens are not accepted). We then submit the signed documents to the company registrar and await the business license. The waiting period for the business license is roughly 10 business days unless expedited service was purchased. With expedited service, a business license can be obtained within 2-5 business days. Contact us for more details about the expedited service.
7. Great, I have obtained my WFOE business license, what is the next step?
Once we secure the WFOE business license, we will contact our clients and the bank to schedule an appointment to open a corporate bank account for the company. Please note, the company director must be present in China to open a corporate bank account and their citizenship should not be among the countries sanctioned in the bank’s system. Alongside being present, the director needs to provide a Chinese phone number linked to their passport and a second person’s passport and phone number linked to this second person’s passport. This second person can be anyone in China (provided their citizenship isn’t among the sanctioned countries) with a Chinese phone number. This requirement is due to the banks’ need to issue online banking devices that require two people’s information. Legally speaking, this second person doesn’t have any rights or obligations regarding the company’s finances or bank account. While this might seem unusual, it remains a requirement, so we advise clients to identify such an individual in China before opening a bank account. The bank account opening process takes around 5-6 hours, and we recommend our clients exercise patience during this process.
8. I have my WFOE bank account opened, what is the next step?
After your WFOE bank account is opened, we’ll proceed to contact the customs department to initiate the process for the e-port device (if you’re registering an international trading WFOE focused on import/export. Note that e-port isn’t required for consultancy or other types of companies). This process typically takes about 5 business days, and we’ll mail the e-port device to our clients once it’s secured.
9. I have obtained my e-port device, are there any other steps to be completed before I start my company’s operations?
Yes, following the acquisition of the e-port for the WFOE, we’ll register the company with the tax department. This process generally takes around 14 business days, and it requires the company director to visit the tax office in person for ID verification.
10. After the WFOE tax registration, are there any other steps involved before the company becomes active?
Indeed, the final step in the WFOE registration is the foreign currency permission application. This process typically takes around 7 business days and necessitates a visit to the relevant government department. After securing the foreign currency permission, the WFOE can commence its operations.
On the whole, the complete process for WFOE registration can span anywhere between 4 and 8 weeks. As we mentioned earlier, all timeframes are approximations due to the inherent unpredictability of government bureaucracy. Although these factors are beyond our control, we will do our absolute best to expedite the process.
Jasur Mavlyanov, an experienced entrepreneur and legal expert, has built a notable career in international business, with a focus on China. With over 13 years of experience living and working in China, Mavlyanov has acquired valuable insights into the Chinese legal system and business environment.
As an entrepreneur, Jasur founded JR & Firm LLC, a company dedicated to providing legal services to global clients entering the Chinese market. His leadership has helped the firm become a reliable partner for businesses navigating the complexities of Chinese regulations and laws. READ MORE about Jasur.