With a solid and competitive market, not to mention the positive economic background, China is home to many foreign companies and a starting point of business on the Asian territory. Considering the particular type of business and the domain in which a company will operate in China, the business start-up costs will fluctuate. In order to understand the requirements of a company registration in China, the business expenses, and the relevant legislation, you should get in touch with one of our Chinese lawyers.
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The overall costs for the business start-up procedures have decreased, compared to previous years. China is opening up to foreign investors and the ease of doing business index for China has improved, as evaluated by the World Bank in the recent years. The wholly foreign-owned enterprise (WFOE) is the most popular type of company among foreign investors. Although some of these companies that operate in specific business areas, like trading, retailing, business consulting, information technology etc., do not need a mandatory minimum share capital, others need to make this initial deposit when incorporating the company. The registered capital for a WFOE ranges between 100,000 CNY and 500,000 CNY.
Other costs incurred during the company incorporation procedure will be for the company seal with a value around 500 CNY or for obtaining various certificates. Depending on the documents you need to provide for incorporation, you may also have costs related to the notary procedures. Our attorneys in China can help you calculate these costs and handle the registration procedures. Here is an infographic that comprises details about the business start-up costs in China:
Apart from the costs for the actual company incorporation, companies in China will also have to prepare a budget for purchasing a property in China or renting an office space. As the business expands and the company will want to hire employees, it will also have to deal with social security contributions. Our Chinese advisors can offer you additional information about taxation in China and the costs involved for an average Chinese company.
Even if the business startup costs in China have decreased in the late years, entrepreneurs who are for the first time on the Chinese market can benefit from varied tax breaks usually met in the industrial sector. For instance, the corporate income tax imposed on companies that introduce and use advanced technology on the Chinese market will be reduced by 50% for the next 3 years of business. Reinvesting the profits in the business in China will lead to a 40% off the corporate tax for that year. Here are a few facts to consider about the taxation structure in China:
China aligns with the international regulations regarding the avoidance of double taxation and in this sense, the country signed a series of agreements with numerous states. Several tax exemptions are provided too. All the legal aspects regarding the taxation in China can be explained by our team of lawyers in China. Below, you can watch a presentation related to the business start-up costs in China:
Wholly Foreign-Owned Enterprise is the preferred business structure in China which is subject to CNY 30,000 as the minimum share capital. Moreover, if you decide on setting up a WFOE in China, you should consider the costs for renting an office space, for opening a bank account, for utilities, staff, and related aspects. The entire incorporation of a WFOE in China is made with the Trade Register, if the Articles of Association are provided, and with complete legal advice offered by our team of lawyers in China. Here is information about a few business start-up costs for WFOEs in China:
If you are interested in accounting matters for your WFOE in China, you can talk to our advisors and find out more details on this aspect.
Yes, you might want to consider the costs for changing the business structure in China, from a sole proprietorship into a WFOE, for example. Foreign investors who want to have an idea about the business startup costs in China might want to think of the costs for changing the business structure at a certain time.
Mergers and acquisitions are available in China and international players should pay attention to the costs imposed, as listed at the Chinese Trade Register. The costs for company seal, company secretary services, business certificates and related expenses need to be considered for mergers and acquisitions and for WFOEs in China. Also, if you need legal support in opening a company in China, do not hesitate to talk to our Chinese lawyers.
Shelf companies are ready-made companies, incorporated in China and kept on a shelf until they age. In terms of costs, entrepreneurs will have to pay attention to the fees imposed at the time of ownership transfer and the ones supported at the Chinese Trade Register.
The private sector in China met not only a significant growth but also respect from the world’s biggest players on the market. The expansion of stock markets and the acceptance of foreign investments and trading have made the national currency compete with the US dollar at a certain point. In China, one can set up his/ her business in sectors like transportation, agriculture, tourism, textiles, food, telecommunication, IT, energy, chemicals, automotive, oil, and minerals, or mining.
The coastal regions of China registered a fast economic progress in the past decades, the authorities offering comprehensive and important support in the investment sector, in order to allow investors to set up easily with their operations. Related to the Chinese economy, the export sector is solid and comprises customers worldwide, as the chief export supplies are the electronic devices, textiles, equipment, plastics, chemicals, machinery and many more.
International investors can easily set up companies in China once they review the business conditions offered by this country. Among these, the unchanging and appreciated economy provides business security for most of the investors wanting to thrive in varied industries. As an example in this sense, the science and technology sector benefits from relaxed regulations, a series of encouragements and the complete support of the Chinese authorities to abroad entrepreneurs looking to place their operations in this area. There are numerous investors who want to set up their companies in China’s special economic zones: Yantai, Tianjin, Guangzhou, Yangtze River Delta, Qinhuangdao, Shanghai or Ningbo might be proper options for business startups, considering the lower tax rates and costs. The portfolio can be diversified with the help of Chinese stock exchanges: Shanghai Stock Exchange, Shenzhen Stock Exchange, Beijing Stock Exchange and many more. Limited liability companies, joint stock companies, joint ventures, sole proprietorships or partnerships are among the business structure available in China, for which complete legal assistance can be offered by our team of lawyers in China. Let us offer you the needed legal support and information about the business start up costs which need to be considered at the time of registration of the company.
Foreign investors can pre-verify a company before doing business in China. Although the information will be in Chinese, with the help of a translator or professional you can obtain the minimum amount of information about the company. The following information can be verified:
– contact information – if the address and telephone numbers are real;
– the registered corporate number or business license;
– the payment method;
– customer referrals.
Apart from these simple steps, you can request the services offered by our law firm in China for company due diligence.
In order to work successfully with your Chinese partners, you need to perform at least a basic verification. Our attorneys in China can provide you with various types of packages for company verification. The basic verification, as described above, will provide you with essential information about the company. This is useful for investors who want to do business on short term or need just a one-time verification. However, for more complex business relationships, we recommend a comprehensive company verification.
Our lawyers in China can check the following information about a company:
– business type, official company name and registration number;
– the registered address and phone numbers;
– the legal representative and the shareholders of the company;
– the paid-up capital and registered capital;
– financial records.
This comprehensive research will allow you to decide whether or not to engage in business activities with a Chinese company. By learning more than just the basics about a legal entity, you can avoid doing business with a company that is bankrupt or that has entered the liquidation phase.
For additional details in this matter, we invite you to contact our law firm in China and make an inquiry about specific taxes and costs for company incorporation.
