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How to Register a Company in China

Updated:2018-5-22 15:36:26    Source:www.tannet-group.comViews:284

China Company Registration Guide
Hotline: 86-755-82143422, Email: tannet-solution@hotmail.com

How to register a company in China may a question for foreign investors who want to invest in China, since the laws and regulations here are different from that of their countries. Therefore, if you are one of those who want to doing business in this emerging oriental country, you would better seek to work with a Chinese consulting firm. 

China company registration, also known as China corporate formation, China business setup, China company establishment, can be achieved through several forms. According to Tannet’s experiences, most foreigners doing business in China choose one of three business forms. One is to operate as a Joint Venture (JV) with a Chinese partner. Another is to open a Representative Office (RO) to represent your business, though this doesn't let you offer services or products in China. The most popular approach is to set up a Wholly Foreign-owned Enterprise (WFOE).

Common Types of Business in China
As mentioned before, Representative office (RO), Joint venture (JV) and Wholly Foreign Owned Enterprise (WFOE) are three popular forms for foreign investors to choose. Each of them differs from another significantly, and has its own merits and challenges.

(1) WFOE allows you to have a 100% ownership of your business operating in China. However, it’s the most difficult structure to set up, but provides the best scope of allowable business activities. WFOE has almost the same rights as Chinese business.

(2) RO is the easiest to open, but gives you the most limited range of possibilities. Representative office cannot conduct income generating activities. This option is only suitable for liaison or product marketing and administrative purposes.

(3) JV is the second most common type for foreign businesses operating in China. Moreover, it’s the only structure in which “restricted” businesses. If you’re planning to manufacture, produce, or sell a high value product, this structure might be not a good match for you since the risks, such as Intellectual Property loss, are elevated.

Business Scope
The choice of business scope (or industrial sector) is extremely important. If you choose a business scope that is too vast, the risk that the permit to open the company will be denied increases because the sector in which you wish to operate falls under one of the restricted or prohibited sectors increases proportionately.

If, on the contrary, you choose a business scope that is too limited, your application will probably be approved but, later, you run the risk that the government will force you to close the company because you’re operating outside the scope that you declared at the time of starting the company.

Corporate Taxes in China
The following is a list of taxes to consider for a WFOE or Joint-Venture:
(1) Corporate Income Tax: This is a tax on profits (or the gross income less the company expenses) of 25%);

(2) Turnover Tax (or Transaction Tax): This is a tax on sales that can vary between 3% and 5% depending on the type of business;

(3) Custom Duties: These are custom duties on goods imported or exported from China;

(4) VAT: The VAT in China is usually 17%;

(5) Individual Income Tax: This is a tax imposed on dividends levied by the company partners and the tax on workers’ salaries.

Business Plan
A business plan is of great importance. You have to draw up a plan and submit it to the government as part of your registration. The plan includes your location, projected revenues, products, budget and your expected number of employees. Your business plan defines what you're allowed to do in China. If you decide later you want to introduce a service that's not in the plan, that won't be allowed. The safest bet is to make the description of your goals as broad as possible so you have wiggle room down the road.

Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.

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