China company registration

China company registration


Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our foreign Clients with a spectrum of international business services including i) business registration in China ii) business license with the State Administration of Industry and Commerce iii) corporate bank account opening in China iv) China visa strategies for foreign employees v) business support and guidance to investors and vi) office rental solutions.

  • Benefits and problems

    Benefits of China company registration

    China business registration - advantages, disadvantages, best uses

    1. Our Clients looking to establish in China should expect to record high sales as the local market benefits from:
      • The world’s second largest economy with a GDP of US$17.6 trillion in 2016 and the largest population in the world with a population of approximately 1.4 billion inhabitants;
      • Access to customers in other large markets in Asia due to China’s proximity to emerging economies including India and Pakistan;
      • A growing demand for sophisticated goods and services as a result of a rising Chinese middle class;
      • Getting access to increasingly competitive and futuristic Chinese technology, research and science, both in technologies and personnel.
    2. Our Clients often relocate some operations of their manufacturing business to China because:
      • Even though the average wages in China have steadily risen in recent years, they are still lower compared to other western countries;
      • Reduced operations cost due to the availability of considerably cheap equipment, raw materials and ready suppliers for various industries;
      • US companies registered in China can reinvest income generated in China into the business without tax implications in the US;
      • Chinese companies importing equipment and goods from other countries enjoy huge import duty concessions from the Government;
      • Heavy industry businesses have access to affordable electricity and water for their commercial and industrial use;
      • Read more on the pros and cons of setting up a manufacturing company in China.
    3. Setting up in a Chinese export processing or industrial development zones is beneficial because:
    4. Our Clients setting up in China will enjoy access to other beneficial aspects to their new businesses including:
      • Access to a considerably large trained and qualified labor pool;
      • Availability of various sector specific incentives and grants to assist startups;
      • Availability of a massive service industry with a myriad of shipping agents, banks and financial institutions;
      • Access to more than 100 double taxation avoidance treaties that can minimize withholding taxes on dividends remitted abroad.

    Problems with China company registration

    1. Starting a business in China can be a complex process taking up to 4 months to complete because:
    2. Our Clients running a business in China will face Government-related difficulties including:
      • Monthly reporting obligations such as i) financial statements, ii) sales tax reports and iii) payroll reports;
      • Pre-approval requirements by the Government before a foreign subsidiary can repatriate their earnings abroad;
      • A borderline draconian regulatory environment that exerts laws prohibiting use of certain superlatives in advertising;
      • Rampant counterfeiting due to poorly enforced copyright laws that risk businesses losing millions in stolen intellectual property.
    3. The Chinese Government can be termed as somewhat discriminatory to foreign investors because:
      • Equity restrictions apply for foreigners in certain lucrative industries such as banking, telecommunications, automobile and finance, and require joint ventures with locals;
      • Foreigners are also prohibited from investing in certain sectors such as education, entertainment, technology, and media;
      • The Government also tends to favour the local companies and Chinese nationals over foreigners in commercial disputes.
    4. China’s language and culture can be an impediment to doing business for foreign entrepreneurs because:
      • Business documents in China are written in standard mandarin and can be challenging to foreigners who don’t understand the language;
      • Less than 1% of the Chinese population speak English fluently, consequently there could be a communication barrier when dealing with local customers;
      • During the Chinese New Year, businesses in China slowdown to a halt for at least one week for the celebrations thereby hampering business operations;
    5. Our Client should expect to suffer steep operation costs doing business in Shanghai, Beijing and coastal parts of China because of:
      • High office rental costs in main Chinese cities like Beijing and Shanghai with rents up to US$1,300 psm per annum;
      • Income taxes including i) 25% corporate income tax, ii) 17% value added tax, iii) 13% custom duties and iv) personal income tax rate of up to 45%;
      • Our Clients should watch out for hidden or extra costs as the Government requires hiring of local consultants prior to proceeding with certain projects;
      • Importing second hand equipment can be costly due to the inspection and cleanup costs in order to meet Chinese customs requirements.
  • Best uses for a China company

    1. China is an excellent location for the formation of a company with manufacturing operations because of:
      • Easy access to, and availability of raw materials, equipment and manpower;
      • Availability of several tax incentives for manufacturing companies;
      • Access to a dense network of suppliers with excellent market proficiency.
    2. China is also a perfect jurisdiction for setting up a trading company to take advantage of the large market size and strong consumer base.
Chinese companies’ summaryWFOEEJVBranchRep OfficeFree ZoneOffshore Hong Kong
Best use of company?All business activitiesManufacturing & distributionTradingMarket researchManufacturing and logisticsHolding company
Corporate bank account location?HSBC ChinaHSBC ChinaHSBC ChinaHSBC ChinaHSBC ChinaBank of China
Client must travel?NoNoNoNoNoNo
Corporate tax payable?25%25%25%None25%0%
Limited liability entity?YesYesNoNoYesYes
China resident director must be appointed?NoNoNoNoNoNo
VAT payable on sales to local customers?17%17%17%N/A17%N/A
Withholding tax on payments to parent company?10%10%10%NoNoNo
Average engagement costs in US$?15,65015,65018,35017,65015,6506,655
Average total engagement period?7 months7 months7 months7 months4 months3 months

See full table

Accounting and tax considerationsWFOEEJVBranchRep OfficeFree ZoneOffshore Hong Kong
Must file an annual China tax return?YesYesYesNoYesYes
Must file annual financial statements?YesYesYesNoYesYes
Audit of financial statements required?YesYesYesNoYesYes
Withholding tax payable on dividends?Yes, 10%Yes,10%Yes, 10%NoNoNo
Must apply for a tax registration certificate?YesYesYesNoNoNo
China company registrationWFOEEJVBranchRep OfficeFree ZoneOffshore Hong Kong
China resident director required?NoNoNoNoNoNo
China resident manager/partner required?NoYesNoNoNoNo
Minimum number of shareholders?12NoneNone11
Minimum number of directors?12NoneNone11
Minimum paid up share capital?US$15,000NoneNoneNoneUS$15,000US$1
Shelf companies available?NoNoNoNoNoYes
Time to incorporate a new entity?4 months4 months4 months4 months4 months4 weeks
Public register of shareholders and directors?YesYesNoN/AYesYes
China business banking considerationsWFOEEJVBranchRep OfficeFree ZoneOffshore Hong Kong
Multi-currency bank accounts available?YesYesYesYesYesYes
Corporate visa debit cards available?YesYesYesYesYesYes
Quality of e-banking platform?ExcellentExcellentExcellentExcellentExcellentExcellent
Can secure trade finance?YesYesYesN/AYesN/A
Chinese business considerationsWFOEEJVBranchRep OfficeFree ZoneOffshore Hong Kong
Can invoice local customers?YesYesYesNoYesNo
Can hire local staff?YesYesYesYesYesNo
Can rent office in China?YesYesYesYesYesNo

Average monthly office rental US$ per sq m?US$95
Minimum statutory monthly salary?US$303
Average monthly US$ salary for skilled labor?US$7,500

Monthly VAT reporting to the Government?YesYesYesN/AYesN/A
Double taxation treaty access?YesYesYesN/AYesN/A

China CNY deposit interest rate0.30%
US$ deposit interest rate0.05%
Overseas remittance currency controls?No

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Healy Consultants’ video guide on China company registration

Contact us

For additional information on our company registration services in China, please email us at Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi