China company registration


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Since 2003, Healy Consultants Group has been efficiently and effectively assisting our foreign Clients with a spectrum of international business services including i) China business registration; 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.

Compare different China entities Tax resident LLC Fast setup solutions
Free zone LLC Representative office
Best use of company? All purposes Client to fast close local deal Global trading Marketing/ research
How soon to invoice Clients? 3 months 2 months 3 months 3 months
How soon can you hire staff? 3 months 2 months 3 months 3 months
How soon can you sign a lease agreement? 4 weeks 4 weeks 4 weeks 4 weeks
How long to supply corporate bank a/c? 6 weeks 4 weeks 6 weeks 6 weeks
How long to supply co. reg / tax numbers? 3 months 2 months 3 months 3 months
Corporate tax rate on annual net profits? 25% 25% 25% around 10% on expenses
Limited liability entity? Yes Yes Yes No

See full table

Government grants available? Yes Yes Yes Yes
Govt approval required for foreign owners? Yes Yes Yes Yes
Res. director/partner/ legal rep. required? No No No No
Minimum paid up share capital? US$1 US$1 US$750,000 US$1
Can bid for Government contracts? Yes Yes Yes No
Corporate bank account location? HSBC China ICBC China China Construction Bank DBS China
Can secure trade finance? Yes Yes Yes No
VAT payable on sales to local customers? 17% 17% 17% No sales allowed
Average total business set up costs? US$18,085 US$47,810 US$16,650 US$19,650
Average total engagement period? 5 months 3 months 5 months 5 months
Accounting and tax considerations Tax resident LLC Fast setup solutions Free zone LLC Representative office
Statutory corporate tax payable? 25% 25% 25% around 10% on expenses
Legally tax exempt if properly structured? No No No No
Group HQ tax incentives? Yes Yes Yes No
Must file an annual tax return? Yes Yes Yes Yes
Must file annual financial statements? Yes Yes Yes Yes
Must appoint an auditor? Yes Yes Yes Yes
Access to double taxation treaties? Yes Yes Yes No
WH tax on payments to foreign s/holders? 10% 10% 10% 0%
Company Registration Tax resident LLC Fast setup solutions Free zone LLC Representative office
Res. director/partner/manager required? No No No Yes
Min. number of shareholders/partners? 1 1 1 parent company
Maximum shareholding for foreigners? 100% 100% 100% 100%
Minimum statutory paid up share capital? US$1 US$1 US$750,000 US$1
Security deposit to be kept with Government? No No No No
Shelf companies available? Yes Yes Yes No
Time to incorporate a new entity? 3 months 2 months 3 months 3 months
Can easily convert to a PLC? Yes Yes Yes No
Public register of s/holders and directors? Yes Yes Yes Yes
Can have preference shareholders / partners? Yes Yes Yes No
Business Considerations Tax resident LLC Fast setup solutions Free zone LLC Representative office
Good entity for trademark registration? Yes Yes Yes No
Can secure an import and export license? Yes Yes Yes Yes

Sponsorship by a local citizen required? No
Our Client must travel to China? No
Temp. physical office solutions available? Yes
You need a local resident as bank signatory? No
Can be wholly foreign owned? Yes
The entity will likely be regulated by? SAIC
Minimum number of directors/managers? 1
Monthly GST reporting to the Government? Yes
Must sign an office lease agreement? Yes
S/holder/director docs attested/translated? Yes
Foreign director needs personal tax no.? No
Foreign non resident director needs a work permit? No
Maximum number of staff allowed? No maximum number for any entity
Expatriate to local staff ratio? None
Can secure residence visa for business owner? Yes
Other useful information
What is included in my cust. sales invoice? Read more
China has signed free trade agreements? Yes
This country is a member of WIPO/TRIPS? Yes
This country is a member of the ICSID? Yes
Average custom duties suffered? 12.47%
Govt foreign investment approval required? Yes
Average monthly office rent? (US$/sq m) US$ 10
Minimum statutory monthly salary? US$ 300
Average US$ salary for local skilled staff? US$509
US$ deposit interest rate? (1 year average) 0.20%
Overseas remittance currency controls? Yes
Banking considerations
Multi-currency bank accounts available? Yes
Corporate visa debit cards available? Yes
Quality of e-banking platform? Good
Crowd funding available in this country? Yes

China business setup summary

  • Benefits and problems

    Benefits of China business registration

    China business registration - advantages, disadvantages, best uses

    1. Our Clients looking to establish a company 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$14.24 trillion in 2019 and the largest population in the world with a population of approximately 1.34 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 start-ups;
      • 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.
    5. China has been positively ranked in the 27th position (out of 137 countries) in the Global Competitiveness Index 2017-2018 edition. This is majorly due to the nation’s i) high technological readiness which has further led to higher penetration of ICT services and an increased FDI as well as ii) large market size which provides the Chinese firms with a wide market to expand into;
    6. The double tax treaty between Cyprus and China includes a tax sparing credit clause, which allows Cyprus-based subsidiaries of Chinese resident entities involved in IT, pharmaceutical and financial services industries to claim 100% of their Cyprus taxes from their corporate tax payable in China. This credit is applicable even if their Cyprus subsidiary is exempted from paying taxes in Cyprus, due to the double tax treaty. This would allow Chinese subsidiaries in Cyprus to save up to 10% net off their total taxes payable, making Cyprus an attractive location for Chinese companies to set up their subsidiaries.

    Problems with startng a business in China

    1. Starting a company 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 clean-up costs in order to meet Chinese customs requirements.
    6. Our Client should expect longer time period to secure a bank account number / e-banking token from local banks because of:
      • Stringent requirements including bank forms to be “stamped” by i) company chop and ii) company’s legal representative chop. Failure to do so might cause the banks to return the forms and will not process our Client’s application;
      • That said, the bank will only consider an application form to be “complete”, provided i) required information is filled properly and ii) included both the chops mentioned above;
      • In certain cases, banks might request to directly deal with our Client to clarify account / application-related issues before to process our Client’s application.
    7. China has been ranked poorly at the 110th position (out of 180 economies) in the 2018 Index of Economic Freedom. The Chinese economy still has state-owned enterprises that dominate the financial and other sectors of the economy with its guiding ideology of “Socialism with Chinese Characteristics” thereby impeding a dynamic business environment in China.
  • 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 a strong consumer base.
    3. China is an excellent platform for foreign investors because:
      • With a population of 1.34 billion people (as per September, 2018) and the rise of the middle class, China-incorporated companies get an access to the world’s most important markets and have the opportunity to offer the Chinese economy with a range of their goods and services;
      • The Chinese economy is gifted with a large and high-quality labour force, giving an additional edge to the employers hiring for their newly incorporated companies in China.

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Contact us

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