Starting a Business in China: How and Where to Start

Starting a Business in China - WFOE EJV CJV

Right now, small and medium sized entrepreneurs can work on starting a business in China (P.R.C.) with more confidence than ever. The Chinese government has committed itself to the protection of foreign partners’ investments, profits and legal rights. These guarantees protect against nationalization and uncompensated takings.  

Whether you want to start an import-export store, boutique shop, hotel, restaurant, or establish a representative office, you must become familiar with relevant operating requirements.

If you want to start a business (aside from merely setting up a representative office) there are three basic vehicles: 

1) Wholly Foreign-Owned Enterprise (WFOE) • 2) Equity Joint Venture (EJV) • 3) Cooperative Joint Venture (CJV)

As you can imagine, the new era has brought about a substantial amount of new regulations. The World Bank’s Doing Business Report provides a great starting point for newcomers to the P.R.C. (Link). The report provides a generalized framework, providing fees and time frames; but nevertheless, professional help should be consulted.

Should you choose to “go it alone,” your main ally will be the State Administration for Market Regulation (SAMR) website: http://www.samr.gov.cn/. There you can find English translations of highly useful laws on advertising, consumer protection, and business associations (incorporation law). It is a good idea to become familiar with these primary sources before you seek counsel. The more you know, the better you can communicate your precise needs to Chinese professionals.

Note: As part of China's 2018 government administration overhaul, the State Administration for Industry and Commerce (SAIC) was merged into the newly-created State Administration for Market Regulation (SAMR).

After you have familiarized the business law in China and planned on starting a business in China, it could be wise to talk to people who have opened businesses and have experience doing business in China. You may want to consult with our business advisors to help you develop strategies in a general business relationship with your Chinese partner. For further details, please click this link
https://www.asiabridgelaw.com/business-advisory-services/.

SAMR is where you will obtain your business license. You will need pre-approval of your business name, which usually takes around two weeks for a decision. You will need to open a Chinese-based bank account, subject to a minimum capital deposit. (The requisite funds and percentages required by each foreign partner or shareholder depend on what business vehicle you have chosen). Although it is possible to complete these initial steps without professional assistance, P.R.C. law mandates a verification report prepared by a Chinese auditing firm.

Further requirements include registering with the local statistics bureau, police station, and taxing authority. Recent developments in social insurance have also obligated foreigner business owners to enroll with local career service centers and welfare centers, before hiring any Chinese nationals. These procedures can be tricky at first, but you should not feel discouraged. They are testament to the bright economic future of foreign direct investment in the P.R.C.,  AsiaBridge Law can help you ease through each step, comfortably and confidently.

About the Author: Michael J. Bellamy

About the Author: Michael J. Bellamy

Originally from Upstate New York, Mike moved to Asia in 1993 and is a China business advisor to both Fortune 500 companies and small businesses.  Recognized as an expert on doing business in China, he has been interviewed by WSJ, CNBC, FT & Bloomberg.

A featured presenter on China issues at seminars, trade shows and corporate events across the globe.

Learn more about Mike and AsiaBridge Law at
https://www.asiabridgelaw.com/business-advisory-services/

Mike is the author of “The Essential Reference Guide to China Sourcing
(available on Amazon).

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Original post: Jun 26, 2014