Starting and Running a Company in Mainland China

01 · ChinaMNC

Why China, and what to weigh before you commit

China remains one of the largest consumer and manufacturing markets in the world, and many foreign founders are drawn by supply-chain depth, supplier proximity and a large domestic customer base. A local legal entity can make it easier to sign contracts with Chinese partners, invoice in renminbi, hire staff and hold assets. That said, market entry is a commitment, not a formality.

Before registering, be honest about your commercial case. Who are your customers, and will they buy from a foreign-invested entity? Do you need local staff, a warehouse, or a factory relationship? What is your realistic budget for setup, compliance and working capital? Consider sector restrictions: some industries are encouraged, some require licences, and some remain off-limits or capped for foreign investment. Rules also vary by city and free-trade zone.

Founders should also plan for ongoing obligations: bookkeeping, tax filings, annual reporting, foreign-exchange compliance and labour rules. Entering China works best when you have a named local responsible person and a clear operating plan, not just an idea. Verify current policy with a qualified local adviser, since implementation details change over time.

02 · ChinaMNC

Choosing a structure: WFOE, joint venture or representative office

The three structures foreign founders most often consider are the WFOE, the joint venture and the representative office. Each fits a different stage and purpose.

• WFOE (wholly foreign-owned enterprise): A limited liability company owned entirely by foreign investors. It can conduct permitted business activities, invoice customers, hire employees and repatriate profits subject to tax and foreign-exchange rules. This is the common choice for founders who want full control and a real operating presence.
• Joint venture (JV): A company shared with a Chinese or foreign partner. A JV can bring local market access, licences, land or relationships, but it also means shared control and governance. Choose it when the partner adds something you genuinely cannot source otherwise, and document decision rights carefully.
• Representative office (RO): A non-profit liaison office. An RO cannot sign business contracts or earn revenue directly; it is suited to market research and coordination. Many founders use an RO to explore, then upgrade to a WFOE if they proceed.

Structure affects capital, licensing, tax and exit. Get advice on your specific sector before filing.

03 · ChinaMNC

The five-step registration process

Registration generally follows a sequence, though exact steps and portals differ by city. Treat the following as the typical path.

• Step 1: Name reservation and pre-check. Propose company names and confirm the intended business scope and industry wording with the local market regulator. Names must be unique and compliant.
• Step 2: Prepare and file incorporation documents. This includes the articles of association, investor documents, legal representative appointment, registered address proof and business scope. Foreign documents often need notarisation and legalisation or consular verification, depending on the source country.
• Step 3: Obtain the business licence. The market supervision authority issues the licence once filings are accepted. This is the formal birth of the company.
• Step 4: Post-licence registrations. Arrange company seals, tax registration, bank account opening, foreign-exchange registration and, where relevant, sector-specific permits.
• Step 5: Staffing and start-up compliance. Register employees for social insurance, set up payroll and bookkeeping, and secure work and residence permits for foreign staff.

Timelines depend on document readiness, city practice and sector approvals. Plan for iteration rather than a single pass.

04 · ChinaMNC

Documents you will typically need

Paperwork is where most registrations slow down. Prepare clean, consistent documents early. Common requirements include:

• Investor documents: Certificate of incorporation or equivalent for corporate shareholders, or passport for individual investors. These usually require notarisation and legalisation or consular verification, plus Chinese translations where needed.
• Company name and address: Proposed names, plus a lease or proof of a registered address acceptable to the local authority.
• Constitutional documents: Articles of association, and for a JV, the joint venture contract.
• People: Appointment of the legal representative, directors, supervisor and, if applicable, the general manager, with identity documents.
• Business scope: A clear description of intended activities, worded to match the local catalogue and any licensing requirements.
• Capital and term: Registered capital and operating period, consistent with your plan and any sector minimums.

Requirements vary by city, sector and investor nationality. Ask your local adviser for a current checklist before you start collecting signatures.

05 · ChinaMNC

Registered address and business scope

Two items cause disproportionate delays: the registered address and the business scope.

Registered address. Every company needs a registered place of business. In practice this may be a leased office, a co-working arrangement that the local authority accepts, or an address provided through an approved arrangement in some zones. The address must be usable for service of documents and must satisfy local rules, which vary by district. Verify zoning, landlord documentation and whether the address can support your intended activities. Do not sign a long lease before confirming the address is acceptable for registration; a mismatch can force a move and re-filing.

Business scope. This is the official description of what your company may do. It should be broad enough to cover your real activities but precise enough to pass review. Some activities require pre-approval or a separate licence; others are restricted for foreign investment. Overly vague wording invites questions, while wording that misses a core activity can block invoicing later. Draft the scope with your adviser against the current local catalogue, and revisit it if your business model changes.

06 · ChinaMNC

Banking, tax and visas after registration

Once the licence is issued, the operating work begins.

Banking. Open a corporate renminbi account and, where needed, a foreign-currency capital account. Banks conduct know-your-customer checks on shareholders, directors and beneficial owners, so expect questions about source of funds and business substance. Foreign-exchange registration is generally handled alongside account opening. Keep records of capital contributions and cross-border payments.

Tax. Complete tax registration and understand your main obligations: corporate income tax, value-added tax, stamp duty and withholding taxes on certain cross-border payments, plus monthly or quarterly filings. Bookkeeping and invoicing rules are specific; most founders engage a local accounting firm from day one.

Visas. Foreign employees need a work permit and a residence permit; the process usually involves a PU letter or notification, a Z visa and in-country steps. Plan HR and timing before staff arrive. Founders themselves also need the correct permit to work legally.

Rules and thresholds change, so confirm current practice with your bank, accountant and immigration adviser.

07 · ChinaMNC

Common mistakes to avoid

Many setbacks are avoidable with preparation. Founders most often stumble on the following.

• Treating registration as the finish line. The licence is the start; tax, accounting, social insurance and annual reporting obligations follow immediately.
• Ignoring sector restrictions. Assuming any business can be foreign-owned leads to rejected filings. Check the negative list and licensing rules first.
• Signing property leases too early. Confirm the address will be accepted for registration before committing to a term.
• Drafting a vague business scope. This can block invoicing or trigger extra scrutiny later.
• Weak investor documents. Missing notarisation, legalisation or translations cause repeated resubmissions.
• Underestimating compliance cost. Budget for accounting, payroll, audits where required, and renewal of permits.
• No local responsible person. A named, accountable contact in China speeds up banking, tax and staffing tasks.

None of these are unusual; each is manageable with a checklist and a local adviser who works on your sector regularly.