China Company Formation: What You Probably Didn’t Know

China is a global business hub and an investment paradise, which explains its fast rise to the second-biggest economy today. Indeed, it is expected to overtake the United States and become the largest by 2028. Another notable thing is that the Chinese economy is still growing, and you can take advantage of it to grow your brand by moving it to China. The first step of expanding your firm to China is company incorporation. Here is what you need to know.

Common Types of Company Formations in China

In China, there are a number of legal company formations that you can select. The commonest option is a wholly foreign-owned enterprise (WFOE). The most notable attribute of this company formation is that it allows for 100% foreign shareholding. So, you will have total control over your company operations, such as who to hire and product development, without having to consult others.

The biggest percentage of foreign-owned companies in the manufacturing sector uses the WFOE structure.

Another common business formation is a joint venture (JV). Like a WFOE, a JV takes the form of a limited liability company, but you must have a Chinese partner. In addition, the Chinese partner is required to have majority shareholding in the company. This implies that the Chinese partner will wield greater control over the management of the company.

The main advantage of this type of company is that it makes it easier for rapid growth into the Chinese market using the already established network of the Chinese partner.

You might also want to open a representative office (RO), which serves as an extension of your already operational company back home. Although simple, this company formation comes with major limitations because you cannot engage in profitable activities. Therefore, it is mainly recommended for activities like scouting for partners and market surveys.

Company Formation in China: What Do You Require?

There are a number of requirements that you require to get your company registered in China. Here are the main ones:

  •       A lease contract of where your company will be based.
  •       Approved name for your business.
  •       Paid-up capital for your company.
  •       A legal representative of the company.
  •       A feasibility study report.
  •       Copies of IDs or passports of legal representatives, shareholders, and directors.
  •       Articles of association and memorandum of understanding.

Note that the process of registration involves working with different offices. This means that approvals at different stages are done by different departments. For example, you need to present all the documents we have listed above to the Ministry of Commerce (MOFCOM) to get an approval certificate.

Then you use the certificate to apply for a company stamp.

Working with Experts for China Company Formation

Most foreigners find the process of China company formation challenging because of the long list of requirements and the need to deal with multiple departments. You also need to apply for additional licenses, such as Tax Registration Certificate and Statistical Registration Certificate after getting the Business License. It can also be pretty expensive because you will be required to take several flights to China.

Now, there is a better, simpler, and convenient method: using an agency to help with registration.

With an expert, you are sure of preparing the documents professionally and finishing the process of registration faster. Because they specialize in company registration, dealing with multiple departments during company registration will also be easy. Most foreign investors find experts like Primasia very useful because they also help with payroll, accounting, filing tax returns, and strategy formulation.

If you decide to take your company to China, it is one of the best decisions because of the long list of benefits that come with the jurisdiction. To make the process even more convenient and professional, ensure to work with experts. Reach Primasia today for all the assistance that you need with China company formation.