Company Registration China
Setting up a company in China is a decision that should be thoroughly considered by foreign investors. A variety of law and regulations further govern the establishment of a company in China and in order for our clients to understand the opportunities that exist to enter the Chinese market and the subsequent decision on the appropriate investment vehicle we support with legal incorporation and advice on corporate structure, as well as advice regarding tax and other considerations associated with the establishment of an entity in China.
Due to our vast experience with company registration in China we are well equipped to support foreign investors with their China entry strategy. Our corporate establishment services range from advice on the appropriate company structure and business model, drafting and submitting of company incorporation documents, as well as operationalization of the entity after establishment of a Chinese subsidiary. To alleviate any administrative burden and ensure a Chinese entity is fully ready for operations we support our clients with bank registrations, tax registrations and applications for additional licenses, such as a customs license or an F&B license, after legal incorporation of a Chinese subsidiary.
WFOE in China
The most common and preferred investment vehicle for foreign investors seeking to incorporate an entity in China is the Wholly Foreign-Owned Entity (WFOE, or also referred to as WOFE). Establishing a WFOE in China occurs exclusively a foreign investor’s capital, hence the denomination “wholly foreign-owned”.
Since setting up a WFOE offers foreign investors the greatest ability to retain control over the company’s operations, strategy and human resources, it is the ideal investment vehicle for most companies seeking to enter the Chinese market. We have supported numerous foreign investors to establish their WFOE in China to engage in consulting, trading and manufacturing activities among others and due to our vast experience are well placed to provide advice regarding all aspects of the incorporation of a WFOE. For more information about setting up a WFOE in China, please request our free WFOE white paper.
Joint Venture in China
Although a Joint Venture is similar to a WFOE, since a Joint Venture can also engage in a variety of commercial activities such as consulting, trading and manufacturing activities, it is more complex to manage due to the involvement of multiple shareholders with a variety of interests. Furthermore, when setting up a Joint Venture in China additionally a shareholder agreement must be prepared and this constitutional document defines the rights, responsibilities and limitations of the shareholders.
The Joint Venture structure may be best suitable to foreign investors whom wish to engage in areas of business which are either directly or indirectly restricted or prohibited by Chinese regulations, or Joint Ventures can suit the need for investors whom intend to leverage the local knowledge and network of their Chinese counterparty. To learn more about establishing a Joint Venture in China, please request our free Joint Venture white paper.
A Representative Office, or RO, is not a separate legal entity but an extension of the headquarter abroad and therefore can be considered a “liaison office”. Foreign investors may consider establishing a Representative Office in China in order to engage in market research and marketing activities in support of its headquarter, where a Representative Office cannot engage in commercial activities.
Branch offices are for foreign investors with existing Chinese subsidiaries who wish to increase their foothold in China and expand the company’s presence to other locations throughout China. It should be noted that a Branch Office is the only fully compliant way for foreign-invested companies in China to hire staff in a city outside of the domicile of its main entity. Establishing a branch office in China is also a cost-effective method to expand the company’s presence throughout China as compared to establishing additional subsidiaries, since branch offices are subject to fewer administrative and compliance requirements.
After the legal incorporation of an entity in China, we support our clients with the operationalization of their entity. Our operationalization support services include:
- Bank account opening, including RMB Basic- and RMB General accounts, Capital Bank accounts, Foreign Denominated Currency accounts and bank accounts for receipt of company loans.
- Basic tax registration with national and local tax authorities.
- Taxpayer status registration, including General VAT Taxpayer- and Small-scale Taxpayer statuses.
- VAT invoice “Fapiao” Registration in order for a Chinese entity to issue official Chinese invoices.
- Company registration for Social Security and the Housing Provident Fund.
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