Establishing a Company in China

China is one of the world's eldest cultures, it lies in East Asia and is known by its full name of "The People's Republic of China". The country's population is about 1.4 billion, making it (together with the regime's ascendancy) an economic giant in the last four decades, the second largest only to the US. China's territory is vast and borders with no less than 14 other countries, including Russia, Mongolia, India, Vietnam and Pakistan. China, as we know it today, was established in 1949 and has been ruled ever since by the Communist Party. At the same time, the Communist Party has in many ways been flexible in its dictatorship and has opened its doors to the West, leading to many changes that have changed the character of China's population. 

Beijing is China's capital, while the country's largest city and financial center is the city of Shanghai. The official language of China is Modern Chinese or Standard Chinese and the country's currency is the Chinese Yuan (also known as "Renminbi"). China enjoys a rich, ancient history, following a path that begins with the origins of human civilization. China's influence is felt in almost every aspect of our lives, wherever that may be around the globe, from consumer products to China's bearing on the global economy. Forming a company in China is a commercial action that gains businesses direct access to the massive and still developing Chinese marketplace, including the country's inexpensive workforce and colossal production capabilities, as well as to the bases of knowledge and skills in areas such as construction, technology and infrastructure, that are rapidly developing within its borders. 

  • The Chinese government is advancing a mammoth project named "The Great Firewall" (GFW), the purpose of which is to sensor out many areas of the Internet. China advocates blocking websites and online content that the government sees as unfit or dangerous to its stability. Further to the GFW, the Chinese are undertaking numerous initiatives to boost their influence on the Internet and on the entire worldwide technology market. 
  • In China, most Internet users access the Internet over mobile platforms and not via personal standard computers. Together with the considerable growth of the Chinese middle class, in particular, and of China, in general, the Chinese technology market is progressing at a lightning pace, burgeoning ahead in both consumption and technological developments. 
  • Despite its immense geographical size, China decided to abolish its time zones. In some areas, sunrise occurs quite late in the day, with the sun cracking the horizon at 10:00 in the morning. 

In terms of GDP, China is the second largest economy in the world, after the USA, where an extremely large portion of the world's production takes place within the confines of this sizable country. Beginning with the communist revolution in China and through to 1978, the country's economy followed the strict and inefficient Soviet model. However, from that point in time forward, many reforms have been implemented and the country has made a careful and gradual transition to an economy exhibiting characteristics of a free market. Today, China is considered communist in terms of its ruling party, however, it is far from classic communism and has, in practice, adopted a singular economic model which includes a multitude of distinctly capitalistic features. With that said, the government is deeply involved in the commercial sector and doing business in the country, including formation of companies, requires adapting to the business culture, local regulations, the varied needs of the Chinese consumers and a wide swath of additional factors. 

China's middle class currently stands at hundreds of millions of people and continues to grow. Labor costs are still affordable but are experiencing upward pressure owing to the steady rise of employment and production costs along with the progress of the local economy. There is no doubt that establishing a company in China opens up a wide range of opportunities, as well as many challenges. As such, it is vital to undertake the process with a professional and experienced service provider that can significantly increase your chances of commercial success in this intricately unique country. 

Mellius has an extensive experience in the Asian market in general and in the Chinese market in particular. Melius offers its clients assistance in establishing a company in several cities in China. 

General Information


Type of company

WOFE - Wholly Foreign-Owned Enterprise

Relevant Companies Law

The Law of the People's Republic of China on Enterprises Operated Exclusively with Foreign Capital

Offices

Businesses are required to provide the authorities with the address of a local office.

Language of original incorporation documents

Chinese

Finance and Taxation


Currency

Renminbi (RMB)

Corporate tax rate

25%

Standard share capital

Minimum registered capital requirements depend on the nature of the business.

Office Holders


Company Secretary (Secretary)

 
Obligation to appoint company secretary

No requirement

Obligation to appoint local secretary

Not required

Type of entity that may function as company secretary

Irrelevant

Director

 
Obligation to appoint company director

Required

Obligation to appoint local company director

Not required

Minimum number of directors

1

Type of entity that may serve as company director

Individual

Shareholders

 
Obligation to register shareholders

Required

Obligation to register local shareholders

Not required

Minimum number of shareholders

1

Type of entity that may register as shareholder

Individual and/or company

Type of shares

Registered shares

Accessibility of Information


Company registrar

Information regarding company shareholders and directors is publicly accessible.

Annual Assembly and Reporting


Obligation to hold annual assembly

Not required

Obligation to prepare financial reports

Required

Obligation to submit financial reports

Required

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