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China Company Incorporation

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In about four decades, China has grown steadily to become the second-largest economy. In 2020, the country’s GDP growth hit 8.1% and the World Bank predicts that it is only a matter of time before the Chinese economy surpasses that of the United States. With this in mind, most entrepreneurs are considering expanding to the country. If you want to see your company grow faster and become the multinational of your dreams, it is time to incorporate it in China.

This post is a comprehensive guide to the process of China company incorporation. Keep reading as we demonstrate the reasons that make China an attractive investment market, types of companies structures, and the main requirements for business formation.

What Makes China an Attractive Offshore Jurisdiction?

China is a global business hub that stands out from peers for the support it provides businesses to spur growth. This is why most of the brands, whether in manufacturing or electronics production, that go to China grow rapidly to become multinationals. Here are other benefits to anticipate from company formation in China:

  • Political and economic stability.
  • Availability of capital through its diverse financial organizations.
  • Being strategically located in the Far East makes it easy for companies to access the entire Asia-Pacific.
  • A huge local market of more than 1.4 billion people.
  • Easy access to qualified labor.
  • State-of-the-art infrastructure.
  • China has signed many bilateral trade agreements to help companies easily access the global market.

Types of Businesses You Can Start in China

China allows foreign investors to open a wide range of businesses, but the most common are the following three:

  • Wholly foreign-owned enterprise (WFOE): This is the most preferred type of limited liability company because it allows 100% foreign shareholding. It also comes with a great deal of autonomy because there are no partners to consult when making decisions.
  • Representative Office (RO): As the name suggests, this enterprise serves as an extension of the parent company back home. Therefore, it is forbidden from engaging in profitable deals, and you should only consider it for activities such as marketing and carrying due diligence.
  • Joint Venture (JV):  This type of business requires you to enter into a partnership with a local Chinese. In addition, the partner must have a bigger shareholding. This implies that you will not have absolute control over decision-making processes. You must also be prepared to share profits with your Chinese partners. We must indicate that China is discouraging people from forming JVs today and recommending other limited liability company models.

What is the Right Process for China Company Formation? 

The process of China company incorporation can be complex and lengthy. The regulations in China are also changing rapidly, and it is critical to understand the requirement for every step. Here are the main steps that you need to follow:

  • Select the company scope and have the name reserved for you.
  • Prepare all the required documents.
  • Apply for an approval certificate.
  • Apply for a business license.
  • Register the business with the Public Security Bureau (PSC) for Company Chops.
  • Register with a local tax bureau.
  • Open a bank account.

To be sure of getting the process of China company registration right, it is paramount to be as accurate, knowledgeable, and carry due diligence. These, coupled with the need to fly to China multiple times, can make company registration even more challenging. This is why you should consider working with experts in China company incorporation. Primasia, one of the leading professionals in offshore company incorporation, can also help with other executive functions, such as accounting and payroll management. Do not just work with any company out there; go for the best!

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