How to start a business in China: Requirements and steps

China isn’t a destination for businesses chasing shortcuts. The world’s most populated market and second largest economy offers real opportunities. However, access follows strict rules. Knowing them in advance often separates success from months lost in bureaucracy.

Starting a business in China as a foreigner involves navigating a unique legal system, with specific legal structures for foreign investment, regulated or prohibited sectors for foreign capital, and a language barrier that makes almost every procedure a reason to have a local expert on hand from day one.

This guide explains how the system works, your options, costs, taxes, and the incorporation process step by step.

How Much Does It Cost to Open a Company in China?

Putting an exact number on the cost of setting up a company in China is difficult, because it depends on many variables: The type of legal structure chosen, the city or province where it is registered, the sector of activity and whether the process is managed directly or through specialised intermediaries. However, we can break down the real costs you will face.

1. Registered share capital

Since 2014, China has removed the general minimum capital requirement for most foreign investment structures. That said, the amount declared as registered capital isn’t just a formality: it partly determines credibility with local banks, suppliers and customers, and can condition the type of licences you can apply for.

In regulated sectors such as financial services, telecommunications, or transport, specific minimum capital requirements still apply. Capital may be contributed in cash, assets, or intellectual property rights, and you do not need to deposit it immediately. You can inject it gradually over up to five years.

2. SAMR registration fees

Registration with the State Administration for Market Regulation (State Administration for Market Regulation) has a low administrative cost, but the fees of the law firms or consulting firms that manage the process are usually the real cost. For a standard WFOE (a mainland China limited liability company wholly owned by foreign investors) service, legal and administrative fees can range from $3,000 to $8,000 (€2,580–6,880), depending on the complexity and whether additional licences are required.

3. Registered office address

Every company in China needs a registered physical address. Standard virtual addresses aren’t accepted. Requirements vary by city, but you’ll usually need a real office lease agreement. Therefore, include this recurring expense in your operating budget from day one.

4. Bank account opening

Foreign companies in China must open at least two accounts: A foreign currency capital account to receive capital contributions from shareholders, and a yuan operating account (CNY) for day-to-day transactions.

The process usually takes one to two months, and some banks require in-person interviews with company directors.

5. Accounting and auditing

All WFOEs must follow Chinese Accounting Standards (CAS) and complete a mandatory annual audit. Monthly accounting costs vary depending on transaction volume and city, but this remains a fixed expense from day one.

6. Corporate seals management

In China, documents are validated using physical company chops rather than signatures. Upon incorporation, you’ll receive several official seals that legally replace the signature of the legal representative. Therefore, proper custody is a critical corporate security issue.

What Types of Companies Can you Open in China?

Chinese law classifies foreign-owned enterprises under the umbrella of Foreign Invested Enterprises (FIE). Within this category, these are the most relevant structures for foreign entrepreneurs and investors.

1- WFOE (Wholly Foreign-Owned Enterprise)

This is the most common structure for foreign investors who want full control over their business. It’s a limited liability company registered in China whose capital belongs entirely to one or more foreign investors, without requiring a Chinese partner.

Article 4 of the 2024 Foreign Investment Law confirms this clearly. The investor appoints the general manager, defines financial policy, and makes all operational decisions independently. It functions as a Chinese LLC for all legal purposes: It can open bank accounts in yuan, sign contracts, invoice, hire staff and participate in tenders.

This option is recommended for consulting, services, technology, B2B trade, and import-export projects, provided the activity does not appear on the Negative List.

Within the WFOE there is a specific variant for commercial activities: The FICE (Foreign Invested Commercial Enterprise), designed for companies primarily engaged in wholesale, retail or franchising in the Chinese market.

2- Joint Venture (JV)

A Joint Venture is a company formed by one or more foreign investors and one or more Chinese partners. There are two types: The Equity Joint Venture (EJV), where profits and losses are distributed in proportion to the capital contributed, and the Cooperative Joint Venture (CJV), where the distribution can be different from the percentage of capital as agreed between the parties. In most cases, the foreign partner in an equity JV must hold at least 25% of the share capital.

Before recent reforms, the Joint Venture was the only way to enter many sectors in China, and it still remains mandatory in certain restricted industries. Its main disadvantage is management complexity and the need to align interests with a local partner, which may create friction, especially regarding intellectual property.

3- Representative Office (Representative Office)

This is the simplest way to establish a presence in China without creating an independent legal entity. It operates as an extension of the foreign parent company: It may conduct representation, promotion, market research, and public relations activities, but it cannot issue invoices, sign commercial contracts in its own name, or generate revenue directly in China. No minimum capital is required, and taxes are calculated based on operating expenses.

This is a good option for companies that want to explore the Chinese market before committing to a more complex structure, or for businesses coordinating supplier relationships and purchasing activities without needing a full commercial entity.

4- Branch of a foreign company

Foreign companies operating in regulated sectors, such as banking, insurance, or aviation, may establish branches in China subject to approval from sector regulators. This is not an independent entity: It operates under the legal identity of the parent company. This structure is less common for general investors and more relevant for large corporations involved in finance or infrastructure projects.

What are The Requirements to Open a Company in China?

Before discussing procedures, every foreign company must answer one key question: Is my activity permitted in China for foreign investors?

The answer lies in the Negative List for Foreign Investment (Negative List), which is regularly updated by the Ministry of Commerce (MOFCOM) and the National Development and Reform Commission (NDRC).

This list classifies sectors into two categories: Prohibited for foreign investment and restricted (where it’s allowed but under specific conditions, such as the obligation to form a JV or for management positions to be held by Chinese nationals). Outside this list, foreign investment is generally permitted.

Once you confirm that your activity is permitted, these are the practical requirements.

1- Legal Representative

Every company in China must appoint a legal representative, who acts on behalf of the company before authorities and controls the corporate seals. This person does not need Chinese nationality or residency and may be a foreign national. However, given that the legal implications of the position are significant, it is recommended that it be someone directly linked to the company and with full knowledge of its operations.

2- Registered office with a verified lease agreement

China does not accept standard virtual office addresses. You must provide a physical office lease agreement in the city where the company will register. Some cities and Free Trade Zones offer greater flexibility, but generally this step cannot be avoided.

3- Documentation for investors and directors

If shareholders are foreign individuals, they must provide an apostilled passport and a notarised Chinese translation. If shareholders are foreign legal entities, such as a holding company, they must provide the incorporation documents of the parent company, also apostilled and translated. All registration documents must be submitted in Chinese.

4- Registration with the SAMR

The formal registration process takes place through the SAMR One-Stop Service platform. You must submit the articles of association, incorporation resolution, proof of capital source, and beneficial ownership information. In 2026, the standard timeframe is between seven and 12 working days if no additional licences are required.

5- Additional sector licences

Depending on the activity, you may need specific licences before or after incorporation.

Examples include medical device registration for healthcare companies, cybersecurity reviews for apps handling personal data, or CCC certifications for automotive and electronic products. These procedures may significantly extend the overall incorporation timeline.

6- Foreign exchange registration

Companies with foreign capital must register their investment structure with the State Administration of Foreign Exchange (SAFE). This registration is necessary to inject foreign capital, operate the foreign currency capital account, and later repatriate dividends abroad.

What Taxes Do You Pay When Opening a Company in China?

The Chinese tax system for foreign companies has been reformed several times in recent years, with the general aim of levelling the playing field between local and foreign companies. Here’s what you need to know.

1- Corporate Income Tax (CIT)

The standard rate is 25% on taxable profits. However, reduced rates are available for companies operating in government-sponsored sectors or in geographic areas with special incentives.

Companies classified as High and New Technology Enterprises (HNTE), which invest in R&D and meet certain technological criteria, are eligible for a reduced rate of 15%. Regions such as Hainan and Shanghai Pudong also offer this preferential rate for certain activities.

Small companies below certain annual income thresholds may benefit from even lower rates under simplified regimes.

2- VAT (Value Added Tax)

China applies a standard VAT system. The general rate is 13% for goods and certain services such as construction, property, and transport. A reduced 9% rate applies to agricultural products, essential goods, and selected services. Modern services, financial services, telecommunications, education, and healthcare apply a 6% rate.

Exports are VAT exempt in China. VAT-registered companies may deduct input VAT from output VAT on sales.

3- Dividend withholding tax

When a WFOE distributes profits to foreign shareholders, China applies a 10% withholding tax on gross dividends.

Some European countries and China have applied a double taxation treaty since May 2021.

4- Social Security contributions

Chinese social security contributions are mandatory for all employees, including foreigners living in China. Employer contributions vary by city and province, but they may reach around 30-40% of gross salary in destinations such as Shanghai or Beijing.

Employees also contribute around 10-11% of salary. Therefore, this becomes a significant cost for companies hiring local staff.

5- Property tax

Companies owning property in China pay property tax at 1.2% of the asset value or 12% of rental income received.

Steps to Open a Company in China

The real incorporation process for a WFOE, which is the most common structure for foreign investors, follows a defined order. These are the main steps.

1- Check whether your activity is permitted

Before starting any procedure, review the current Negative List to confirm that your activity isn’t prohibited or restricted for foreign investment. If it’s restricted, assess whether a Joint Venture is viable for your business model.

If the activity appears on the prohibited sectors list, there’s no flexibility: Foreign capital cannot operate in that sector within mainland China.

2- Choose the registration city and zone

Choosing where to register the company isn’t only logistical, it is strategic. Free Trade Zones (Free Trade Zones), available in Shanghai, Beijing, Shenzhen, Hainan, and other cities, offer more favourable conditions for certain sectors. The Negative List is shorter within FTZs, procedures are faster, and tax incentives are more accessible.

Outside FTZs, some industrial and technology development zones also offer attractive local incentives. This decision affects operating costs, effective taxation, and talent recruitment.

3- Reserve the company name

The company name must be written in Chinese and must be unique nationwide. Specific restrictions apply: It cannot include terms such as “China”, “National”, “International”, or “State” without special approval.

It cannot mislead the consumer about the nature of the activity. And it mustn’t coincide with any company already registered. The local SAMR manages name reservation, which may take between two and 15 working days depending on the authority.

4- Prepare the incorporation documents

This step includes drafting the WFOE articles of association, incorporation resolutions signed by shareholders, appointing the legal representative and general manager, and preparing apostilled documentation translated into Chinese for all investors and directors.

If you operate remotely, you will need an apostilled power of attorney authorising your representative in China. Foreign individuals must provide an apostilled passport with notarised Chinese translation. Foreign legal entities must provide incorporation documents for the parent company, also apostilled and translated.

5- Register the company with the SAMR

All documentation is submitted through the local SAMR One-Stop Service platform. Once approved, the Business Licenseis issued, which is the document certifying the legal existence of the company in China.

From 2026, the standard timeframe is between seven and 12 working days if documentation is complete and no additional sectoral licences are required.

6- Obtain the corporate seals

After receiving the Business Licence, you must produce and register the official company seals. China uses several types of seals for different purposes: The company seal, legal representative seal, financial seal, and sometimes a contract seal.

Each seal has a specific and legally defined function. Companies should document clear custody and usage policies for seals from the beginning.

7- Open the bank accounts

With the Business Licence and corporate seals ready, you can begin opening bank accounts. The foreign currency capital account is required to receive capital contributions from shareholders. The Yuan operating account is the account that will be used for day-to-day business transactions.

The process usually takes between one and two months, depending on the bank and city.

8- Complete the additional registrations

After the main registration, the company must register with several other agencies: The State Administration of Taxation (to obtain the tax code), the State Administration of Foreign Exchange (for foreign exchange registration), and the local Social Security.

This is also the right time to appoint a certified accountant or external accounting firm. They’ll handle monthly VAT filings, quarterly Corporate Income Tax declarations, and the mandatory annual audit.

How Can You Get Internet Access For Business Travel in China?

China is one of the few countries where the internet doesn’t work like the rest of the world. The so-called Great Firewall blocks Google, Gmail, WhatsApp, Instagram, LinkedIn and most Western platforms. Hence, most travellers opt to use a VPN for China.

Because of this, if you travel for business and need access to your usual work tools from China, connectivity requires more planning than in most destinations.

The eSIM for China from Holafly gives you unlimited data for as many days as you need, with coverage in all major cities across the country. For business travel, having active data from the moment you land allows you to manage communications, access cloud documents, and coordinate with your team without relying on unknown networks.

For longer stays, Holafly’s monthly plans are a better option, as you sign up once and don’t have to worry about any further paperwork. The plan renews automatically every month and has no long-term commitment. In other words, you can cancel whenever you want without penalties. Most importantly, these plans provide coverage in more than 160 countries.

Another benefit of the plans is Always On, which guarantees you an automatic 1 GB per month in over 70 countries at no extra cost, activated only when your main plan ends or you cancel it. Therefore, you always have a backup connection without doing anything.

Frequently Asked Questions About Opening a Company in China

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