How to start an international trading company in China in 2023
Establishing an international trading company in China is a popular choice for many foreign entities and entrepreneurs. This is largely attributed to China’s dominance in global manufacturing, which constitutes nearly 30% of total global output. Naturally, this presents an appealing opportunity for foreign businesses seeking to produce their products in China for global export. [Please provide an introduction here.]
In this article, we delve into the step-by-step process of registering a Wholly Foreign-Owned Enterprise (WFOE) – an international trading company – in China, as of 2023.
Navigating the registration process for a company in China can be a challenging task, especially given the intricacy of the system and language barriers. The process is primarily conducted in Mandarin Chinese and demands a thorough understanding of the system, beyond just language proficiency. As such, we strongly recommend engaging a professional service provider like JR & Firm to ensure a seamless registration process and to circumvent any potential missteps.
1) Upon signing a service agreement with us for company registration, the first step for our clients is to contemplate their company name. A detailed KYC (Know Your Customer) questionnaire will be provided for them to complete. Chinese company names adhere to a specific format, which includes the place of registration, the business direction, and ends with “Co., LTD”. This format comes in two variations:
- [Place of Registration] + [Chosen Name] + [Business Direction] + Co., LTD
Example: Shanghai Silk Road International Trading Co., LTD
- [Chosen Name] + [(Place of Registration)] + [Business Direction] + Co., LTD
Example: Silk Road (Shanghai) International Trading Co., LTD
2) Upon receiving the completed KYC form, which includes details about the shareholders, a single company director, and a separate company supervisor, along with the chosen company name and a list of products and services the company will offer, we will proceed to prepare the application to reserve the company name. This application is then submitted to the company registrar, and we anticipate approximately five business days for the name registration to process
3) Once the company name has been reserved (the reservation lasts for one month), we’ll assemble the remainder of the company registration application and submit it to the company registrar. The waiting period for the issuance of the company’s business license is approximately 10 business days. During this period, the company’s shareholders, director, and supervisor will be required to sign the company’s structural documents. We recommend using a black gel pen for these signatures, as China’s legal document requirements do not accept other pen types. The signed structural documents must be sent to our office in their original form, from where we will forward them to the company registrar.
4) After acquiring the company’s business license (commonly known as the general business license, valid for 30 years or more), we will liaise with the client and the bank to arrange a suitable time for the opening of the company’s corporate bank account. Depending on the availability of all parties, we’ll schedule an appointment, during which a representative from JR & Firm will accompany our clients to the bank. The bank account opening process typically lasts around 4-5 hours, requiring patience from our clients.
On the bank account opening day, clients (particularly the company director; the shareholders and the company supervisor are not required to be present) should bring the following:
- Company documents and company seals.
- Original passport of the company director.
- Chinese phone number linked to the company director’s passport.
- Original passport of the company supervisor.
- Chinese phone number linked to the company supervisor’s passport.
Note: If the company supervisor does not have a Chinese number linked to their passport, our clients can substitute this with another individual who possesses a Chinese phone number linked to their passport and their original passport. This second individual’s original passport and Chinese phone number are essential due to bank compliance requirements, which are unavoidable.
Note: As per recent guidelines, company shareholders, the director, and the company supervisor cannot be from countries that are sanctioned or blocked in the bank system (such as Syria, Iran, Russia, etc.).
5) After the company’s bank account has been established, we will proceed with the application for the company’s Electronic Port (E-Port). The anticipated waiting period for the E-Port is approximately five business days.
6) Upon receipt of the company’s E-Port, we will move forward with the application for the company’s Foreign Currency Permit. This process necessitates a visit from the company director to the responsible government department, accompanied by a representative from JR & Firm. We estimate a waiting period of approximately ten business days for the Foreign Currency Permit.
7) The final step in the process is registering the company with the tax department. This, too, requires a visit from the company director to the tax department in person, again accompanied by a JR & Firm representative. The waiting period for the completion of tax registration is around five business days.
Upon completion of all the aforementioned steps, our clients will be fully prepared to commence operations with their China International Trading companies.
Below, we’ve included a list of Frequently Asked Questions about registering an International Trading WFOE in China in 2023. We encourage you to review them, and should you have any additional questions not covered in this article or the FAQs, please feel free to contact us. We’re always ready to assist you.
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.