Starting a business in China could be an exciting financial venture. China is arguably the leading country when it comes to the business sector, and comes with a host of advantages: the huge market size, the numerous product opportunities, and the large pool of local talent. If you’re on the fence about launching or extending your business to the east, then read on to understand the basics of business registration in China, licensing, and Chinese bureaucracy before you decide to take the plunge. 

Understanding The Basics Of Business Registration In China

It’s without a doubt that obtaining all the legal documentation for starting a business in China – such as licenses, permits, and other bureaucratic papers – can be a hard task. What makes the process even more stressful is that your business will not be seen as legal, and therefore any business activity will be illegal without the correct registered documents. Perhaps the most important document to obtain, though, is the WFOE. 

‘WFOE’ is an acronym of Wholly Foreign-Owned Enterprise. It’s an investment vehicle for China-based businesses where foreigners can incorporate a foreign-owned LLC (limited liability company). Although, a WFOE is unique in the sense that it doesn’t require the involvement of an investor, which is a necessity for other investment vehicle business models like a joint venture. For this reason, a WFOE is particularly attractive due to the flexibility it offers, and the relative easiness of setting it up in comparison. There are other options, though, for example, you can keep your company in your current location and simply important from China via the likes of leelinesourcing, which won’t require registration.

If you do want to set-up within the boundaries of China, a WFOE is needed. The basic elements of a WFOE include: 100% foreign equity, capital contribution including cash, capital goods, property rights, know-how, and land use rights, as well as early termination, meaning that liquidation is permitted in accordance with Articles of Association and relevant Chines Law. Ultimately, a WFOE is a perfect model to use to start a business in China as a foreign person. Not only does it offer maximum versatility, but it’s also needed in order for you to actually trade as a foreigner. 

Acquiring WFOE When Starting A Company In China

Seeing as no minimum registered capital is required for Wholly Foreign-Owned Enterprise companies in China, what’s needed to obtain the WFOE itself is for you to supply a checklist of documents. These will be all the regular document you’d assume would be needed for starting a company in China, so it shouldn’t come as too much of a surprise. 

The first document you’ll need is a Certificate of Incorporations, Articles of Formation (or equivalent) certified by the Chinese embassy or Chinese consulates overseas. Additionally, you’ll need to present a bank reference letter so that they can double-check your bank accounts are in good standing, and that you’re serious and want to start a business in China. On top of that, you’ll need the usual documentation at hand, such as copies of passports to ensure you are who you say you are, letters of authorisation, evidence of the office address in China, as well as a number of proposed Chinese names for the company in China. 

Ultimately, there are many, many documents and procedures to go through, but hiring the help of professionals who have years upon years of experience will ultimately make the whole process a lot easier. They’ll be able to guide you every step of the way with how to start a business in China, and will get you everything you need to start your company without hassle.

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