Without a question, China is a major economic power and a haven for investors. The nation has been undergoing rapid growth since its financial reforms in the 1970s, which makes it the ideal starting point for companies looking to expand and trade internationally. You must register your company properly to benefit from this tried-and-true offshore investment location.
China also has several trade accords in place that lower the hurdles for doing business internationally. Before investing money or negotiating a lease for commercial space, international enterprises should conduct their due diligence.
Discover the 9 steps to beginning a business in China as a foreigner in the next sections, from choosing a location to recruiting your first staff members.
Choose a Location for Your Business
You must choose the location of your company before beginning an enterprise in China. China is a sizable, developing nation where new commercial hubs are continually developing. However, you could choose to concentrate on places like Shanghai, Beijing, and Guangzhou which are already thriving economic hubs.
Shanghai is a preferred option because of its unique benefits. Many foreign enterprises can trade without spending as many taxes thanks to Shanghai’s Free Trade Zone. Although Shanghai may be a fantastic site for the majority of foreign industries, your final choice will depend on your unique commercial requirements.
Select a legal framework
When establishing a company in China, there are many various business frameworks to choose from. Below, is a list of the most common types.
Foreign-owned company
A business founded by foreign governments without personal intervention from a Chinese investor is known as a fully foreign-owned company. In China, it is the most typical kind of foreign-invested company. These companies must submit annual reports of their financial records to the relevant government bodies.
Joint ventures
The joint venture is the second most common type of business company employed by foreign entrepreneurs in China. There are fewer limitations as a result of expatriates having Chinese associates in JVs. Furthermore, they will be knowledgeable on how to deal with difficulties and act as a bridge for problems like language obstacles.
Representative office
A Representative Office promotes an established overseas firm in China as a distinct entity. ROs are less expensive and simpler to open than other kinds. But, based on the goal of the corporate entity and the operating restrictions placed on ROs, this might not be a realistic choice.
After choosing a legal form, there are still a few things to think about, like determining the minimum registered capital.
Make a corporate plan
A comprehensive business plan is essential when beginning a firm in the country. Your business plan should outline your field, your offerings, as well as the location, the estimated employees, and your financing. Your corporate plan will eventually receive government approval. You must follow the instructions you’ve recorded, or the Chinese government may fine you or take other legal action against you.
Establish a bank account
A bank account must be opened, particularly if your company is established as a WFOE. You can establish a few various types of non-resident accounts. You might anticipate being asked to show documentation of your company’s registration when opening a bank account, such as a current business license, company code document, tax registration number, or incorporation documents. Although the criteria differ from bank to bank, a valid ID, a business stamp, and the directors’ information are typically needed.
Register your trademark
Trademarks registered outside of the country are not recognized. It is a first-to-file country, which means that the owner of the trademark who files it first has the right to use it lawfully. You must file trademarks as soon as possible and file any relevant patent applications in Chinese after confirming that your mark is presently available.
Submit documents
You’ve already made your legal decision, created a corporate strategy, hired staff, and registered your copyrights and patents at this phase in the process of opening a business in the country. It’s now time to submit any last-minute documents.
You can encounter a few surprises when submitting your documents. A local government may wish to visit your premises or see a tangible example of your goods, based on where you are.
