THE ART OF
BEING LOCAL
IN CHINA
Starting a Business in China
China is the world's second-largest economy and, for many international companies, the most important single market in Asia. InterGest China has been supporting foreign companies with starting a business in China and with running their subsidiary since 1994, from its head office in Shanghai and five further offices.
What do I need to know about starting a business in China?
Short answer: The standard route for starting a business in China is the WFOE, a limited liability company held 100 % by foreign investors (Wholly Foreign-Owned Enterprise). Since the 2024 reform of the PRC Company Law, China's companies act, there is no statutory minimum capital; the subscribed capital must be paid in within 5 years. Total costs come to around RMB 30,000 (just under €4,000), of which roughly RMB 2,000 are direct official fees. The Business License, the state-issued licence that makes the company legally operational, takes about 1.5 to 2 months. The process of company incorporation in China involves six steps, from pre-checking the company name to customs registration.
Interested in other countries where InterGest is present? You can find more about other countries on our overview page starting a business abroad. There, you will find a comparison table of the most common legal forms as well as regional overviews: for example, on starting a business in Singapore, starting a business in India, starting a business in Mexico or starting a business in Hungary.
An overview of all InterGest services can be found on our services page.
Your contact for starting a business in China
Sam Xiaogang Yuan has been Managing Director of the offices in Shanghai, Beijing, Guangzhou and Kunshan since InterGest China was founded in 1994. He holds an MBA and has guided foreign companies into the Chinese market for more than two decades, helping them place their products and grow internationally.
Since 2006 he has been Senior China Advisor to the Welsh Government's International Business Wales Committee in the UK. In 2013 he was appointed Representative of the Saarland Ministry of Economic Affairs in China. He also co-founded the German Industry Park in Kunshan. To mark InterGest China's 30th anniversary, Sam Yuan told the story of his path from first employee to Managing Director.
What are the advantages of starting a business in China?
Starting a business in China gives you access to market, supply chains and talent in a single country. These are the advantages of doing business in China that count most in practice:
- Second-largest economy: A domestic market no other country can replace. China's gross domestic product passed the RMB 140 trillion mark for the first time in 2025.
- Efficient supply chains: Suppliers, logistics, and production are located close together in dense clusters. Procurement and manufacturing operate at a faster pace than in most other markets. Interested in additional cost-efficient manufacturing locations? Discover our pages on starting a business in Mexico or starting a business in India.
- Innovation: Short development cycles and a high patent density, above all in electronics, electric mobility and mechanical engineering. Companies that develop locally keep pace with the market.
- More open market access: The negative list (in Chinese law the Negative List for Foreign Investment Access, the register of all sectors with access restrictions for foreign investors) was cut to 29 items in 2024. Manufacturing has been fully open since then.
- Deep talent pool: Millions of university graduates every year, many with a technical profile. Staff for production, sales and finance are available, provided pay and leadership are designed locally.
- Tax incentives: Free trade zones and HNTE status (High-and-New Technology Enterprise, a state certificate for technology companies) cut corporate income tax from 25 % to 15 %.
None of this makes the project simple. Legal form, company chops, currency controls, trademark protection: each of these topics can stall a formation if it comes up too late. InterGest China provides the local team that sets your company up properly and keeps the known mistakes from happening in the first place.
Which legal form is right for starting a business in China?
For starting a business in China, several legal forms are available; in most cases InterGest recommends the WFOE. Anyone who wants to set up a company in China with full control usually chooses it: the WFOE belongs 100 % to the foreign parent, liability is limited to the subscribed capital, and profits can be distributed directly after tax. No Chinese partner is required, a single director is sufficient, and a supervisory body has been optional since the 2024 reform.
If your sector appears on the negative list (the state register of all industries that are restricted or closed to foreign investors), you must instead enter a China joint venture, a company shared with a Chinese shareholder (JV for short). Typical cases are education, certain media activities and parts of the healthcare sector. The third form is the representative office (RO), a liaison office without revenue of its own. The difference to a subsidiary: a representative office is not a separate legal person. It may observe the market and build contacts, nothing more. Its corporate income tax is assessed on the basis of its office expenses.
Two further forms exist for special purposes: the Foreign-invested Joint Stock Limited Company, a stock corporation for capital market plans, and the Foreign-invested Limited Partnership Enterprise, the structure of choice for fund investments.
| Legal form | Minimum capital | Typical use | Duration |
|---|---|---|---|
| WFOE | No minimum, paid in within 5 years | Subsidiary, independent market development | ~ 1.5 – 2 months |
| Joint venture (JV) | No minimum, sector-dependent | Mandatory for sectors on the negative list | 2 – 3 months |
| Representative office (RO) | No registered capital | Market observation, liaison work, no revenue | ~ 1 – 2 months |
| Joint Stock Company | Depends on the project | Capital market, planned listing | Several months |
| Limited Partnership | Depends on the project | Fund and investment vehicles | Several months |
Advantage: The WFOE gives the parent company full control over strategy, staff and cash. It is the only form with unrestricted capacity to do business, from imports through own production to sales.
Disadvantage: It remains a Chinese company with Chinese obligations: accounting under Chinese GAAP (the mandatory Chinese accounting standard), an annual audit and currency controls on every cross-border payment.
Location and infrastructure in China
The choice of location often carries more weight when starting a business in China than the choice of legal form: wage levels, administrative practices, and the funding landscape differ significantly from city to city, similar to how the question of location within Europe, for instance when starting a business in Hungary, is also decided by wage levels and the funding landscape. Five criteria stand out:
- Industry clusters: Electronics in Shenzhen and Suzhou, machinery and automotive in the Yangtze Delta around Shanghai, consumer goods and logistics in Guangzhou, IT and research in Beijing and Hangzhou. Proximity to your own cluster shortens every supply chain.
- Transport links: Seaports, airports and the high-speed rail network decide how quickly goods reach customers and components reach the plant.
- Availability of skilled staff: University density, industry experience and English-speaking staff for finance and sales vary considerably between regions.
- Incentive schemes: Free trade zones such as Shanghai, Hainan or the Greater Bay Area offer tax breaks, simplified currency procedures and rent reductions. The conditions are tied to concrete evidence.
- Local administrative practice: The registry works at district level. How fast applications move depends on how well you know the office in charge.
InterGest China is based in Shanghai and maintains offices in Beijing, Kunshan (German Industry Park), Guangzhou, Hangzhou and Wuhan. The team covers the most economically active regions and advises on the right location, including logistics and tax.
For many companies China is the entry point into Asia, rarely the only market. Those building out the region often add Japan as a second pillar, with its own legal and tax framework. The same local support you get in China applies to starting a business in Japan.
What are the steps involved in starting a business in China?
Starting a business in China follows six steps. The sequence below describes setting up a WFOE in China; a joint venture adds the partner negotiations on top:
- Pre-check with the registry: Company name, business scope and location are checked in advance by the State Administration for Market Regulation (SAMR), the state market and registry authority that maintains the company register. This stage also shows whether the planned business scope falls on the negative list and therefore dictates the legal form.
- Prepare the legal documents: Required are the Articles of Association China expects (the company's statutes in Chinese), the shareholder resolution, the notarised and apostilled certificate of incorporation of the parent company or the investors' identity documents, ID copies of the management, details of the beneficial owner, the registration forms and the office lease. All foreign documents must be translated into Chinese. InterGest can prepare the Chinese versions and check the certifications before anything is filed.
- Registration and Business License: The complete file goes to the competent SAMR branch. Once the Business License is issued (internationally the document is also called the China Business Registration Certificate), the company exists as a legal person.
- Produce and register the company chops: The company chop, finance chop, contract chop and the personal chop of the legal representative are produced and registered with the police authority.
Caution: in China the chop replaces the signature. Whoever physically holds the chops can sign for the company; custody should therefore be regulated by contract from day one. - Open the bank account and register the investment: Business accounts are available at local banks or at foreign banks with a presence in China. The legal representative presents the original passport at the counter; some banks accept video identification or an appointment at an overseas branch. In parallel, the investment is registered with the SAFE State Administration of Foreign Exchange (China's currency regulator), so that capital and later distributions pass cleanly through the currency controls. InterGest can support you with both steps.
- Tax and customs registration: With the tax registration, the company receives its Chinese tax number and can issue official invoices. Companies with import or export business additionally need the Customs Registration China requires for cross-border trade.
From pre-check to Business License, setting up business in China takes around 1.5 to 2 months. Chops, bank account and registrations come on top, but can partly run in parallel. Booking translations and the bank appointment early saves two to three weeks.
How much does starting a business in China cost and how long does it take?
Starting a business in China costs around RMB 30,000 in total, just under €4,000. Only about RMB 2,000 of that goes directly to authorities, translators and chop makers; the rest covers certifications, apostilles and the support provided by InterGest.
| Item | Duration | Costs |
|---|---|---|
| Pre-check with SAMR | 1 – 2 weeks | Included |
| Documents, translation & apostille | 2 – 4 weeks | RMB 5,000 – 10,000 |
| Registration, Business License & Chops | 2 – 2,5 weeks | Approx. RMB 1,000 (direct) |
| Chops, bank account, SAFE filing | 2 – 3 weeks | RMB 3,000 – 5,000 |
| Advice & project management | Parallel | Remainder up to approx. RMB 30,000 |
| Total (start) | ~ 1.5 – 2 months to the Business License | ~ RMB 30,000 |
Registered capital China: Since the 2024 reform there is no statutory minimum. The amount follows from the business plan: it must carry the company's liquidity through the first years, because the currency regulator measures later repatriations against the registered amount. Payment is due within five years of the Business License being issued, in instalments if preferred. For comparison: a German GmbH requires €25,000; in China the business plan sets the figure.
Corporate income tax China and other taxes: The standard rate is 25 % (15 % with HNTE status, an effective 5 % for small companies on profits up to RMB 3 million). VAT is 13 %, 9 % or 6 % depending on the type of supply. Dividends paid abroad carry a 10 % withholding tax, often reduced to 5 % under double taxation treaties.
What documents do I need for starting a business in China?
Starting a business in China means paperwork: for business registration in China, SAMR requires the following documents before issuing the Business License. The WFOE in China requirements at a glance:
For natural persons as shareholders:
- Valid passport, notarised and apostilled
For companies as shareholders (e.g. when you set up a subsidiary):
- Current certificate of incorporation or commercial register extract of the parent company, notarised and apostilled
- Proof of the signatory's authority to represent
Additionally required for registration:
- Articles of Association China – the company's statutes in Chinese
- Shareholder resolution on the formation
- ID copies of all members of the management
- Details of the company's beneficial owner
- Registration forms of the competent SAMR office
- Office lease for the Chinese location
InterGest can coordinate the procurement, translation and apostille of all documents from the home country and file them locally, in the correct order, because that is exactly where many first attempts fail. You will find further guidance in our FAQs.
What legal aspects apply when starting a business in China?
The legal aspects of starting a business in China have changed more since 2020 than in the twenty years before. Three texts form the foundation.
The framework is set by the Foreign Investment Law (FIL), China's foreign investment act. It has been in force since 1 January 2020, replaced the earlier special laws for foreign investment and treats foreign investors in principle the same as domestic ones, as long as the sector is not on the negative list. That list was last revised in 2024 and cut to 29 items; manufacturing is fully open, while restrictions mainly concern telecommunications, education, media and parts of the healthcare sector.
The second pillar is the PRC Company Law, China's companies act. The 2024 version abolished the statutory minimum capital, allows a single director and makes the supervisory body optional. In return, it requires the full capital contribution within five years.
Day-to-day accounting follows Chinese GAAP; the Chinese GAAP vs IFRS differences matter mainly for group consolidation, because valuations and provisions diverge. On request, InterGest therefore prepares parallel reporting under IFRS or US GAAP.
These authorities and laws accompany every company formation in China:
| Legal basis / authority | Function |
|---|---|
| Company Law of the People's Republic of China | Governs formation, governing bodies, capital and dissolution. The basis of every WFOE and every China joint venture. |
| Foreign Investment Law China 2020 (FIL) | Framework for foreign investment, principle of equal treatment. |
| Negative List for Foreign Investment Access | Register of sectors with restrictions or prohibitions for foreign investors (2024 edition: 29 items). |
| The State Administration for Market Regulation (SAMR) | Maintains the Chinese company registry (also called the chinese business register), issues the Business License, supervises competition. |
| SAFE State Administration of Foreign Exchange | Currency regulator: FDI registration, capital transfers, profit repatriation. |
| State Taxation Administration | Tax registration, tax number, corporate income tax, VAT, withholding tax. |
| China National Intellectual Property Administration | Responsible for trademark registration china and other IP rights. |
The full text of the Company Law is documented on the government portal, currently in Chinese only: gov.cn – Company Law of the People's Republic of China.
What financing options are there for starting a business in China?
Starting a business in China can be financed from several sources; each of them passes through the currency controls:
- Equity from the home country: The standard route. After the SAFE registration, the registered capital flows to the subsidiary's account. Crucially, only registered capital can later be distributed back as dividends.
- Shareholder loans: Loans from the parent company (called foreign debt in Chinese currency law) are possible but capped by a quota system. Contract and SAFE filing must be correct, otherwise interest and principal cannot be returned.
- Local bank loans: Usually viable only once the company can show revenue and collateral. Foreign banks with a China presence work with international mid-sized companies more often than the large state banks do.
- Venture capital and business angels in China: Relevant above all in technology, electric mobility and consumer goods. Cross-border investment structures are demanding and belong in specialised hands; crowdfunding exists but plays hardly any role for mid-sized companies.
- Free trade zone incentives: Tax breaks, simplified currency procedures and rent reductions, varying by region and tied to evidence.
Which mix works depends on sector, capital needs and speed, and in China additionally on the currency controls. In most cases it is a combination of equity and shareholder loans. InterGest China checks quotas and eligibility and makes sure the capital structure does not block later profit repatriation.
Registered capital set wrongly
Set too low, liquidity will not carry the company through the start-up phase; in addition, the ratio of total investment to registered capital must comply with the statutory quotas. Set too high, it creates a payment obligation that must be met within five years. Rule of thumb: align the capital with the actual needs of the first two to three years.
InterGest can calculate the registered capital together with the parent company on the basis of the business plan, before the articles are drafted, not afterwards.
Contributions in kind not recognised
Anyone wishing to contribute machinery, patents or software needs a valuation recognised in China. Foreign appraisals are regularly rejected, transfers of ownership are delayed, and technical value is assessed too low. That costs time and, in the worst case, substance.
InterGest can align the valuation logic with leading Chinese appraisal institutions in advance and document the contribution so that it holds up with the tax office and the currency regulator.
Trademark registration China started too late
China grants trademarks on a first-to-file basis: the right goes to whoever files first, regardless of who actually uses the mark. Time and again, third parties register the Chinese translation or the logo of a foreign brand before its owner enters the market. Buying the mark back is expensive, and litigation is slow.
Trademark registration therefore belongs six to twelve months before market entry: the English name, the Chinese rendering and the logo, in all core classes. InterGest can handle filing and monitoring.
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What services does InterGest provide for yourmarket entry in China?
Short answer: InterGest China has been supporting foreign companies since 1994 with company formation, administration, accounting, HR and reporting in China. The team works from its head office in Shanghai and from offices in Beijing, Kunshan, Guangzhou, Hangzhou and Wuhan, serving clients bilingually, from the first visit to the authorities to the monthly group report.
InterGest China is led by Sam Xiaogang Yuan, Managing Director since the company was founded in 1994. He holds an MBA, has been Senior China Advisor to the Welsh Government's International Business Wales Committee since 2006, was appointed Representative of the Ministry of Economic Affairs of the Saarland in China in 2013 and co-founded the German Industry Park in Kunshan.
For foreign parent companies, this closes one gap above all: the one between Chinese administrative and banking practice and Western reporting standards. InterGest works at the district level with the SAMR, knows the banks' requirements for opening an account, and provides the headquarters with figures using the logic it is familiar with from Europe, the same logic with which the network also supports European projects such as starting a business in France or starting a business in Hungary. A real-world example is the launch of animonda Beijing, which InterGest China steered through the authorities on schedule during the lockdown.
- Business Establishment: InterGest guides your company formation in China from the SAMR pre-check to the Business License. We have the company chops produced and registered with the police authority, arrange the bank appointment for the account opening and file the investment with the currency regulator. We also start the trademark registration China requires before your brand becomes visible in the market.
- Strategic consulting: Before any application is filed, we work out with you whether and how the move pays off. China market entry consulting at InterGest means thinking through location, legal form and sales channel together and turning the result into a workable china market entry strategy.
- Accounting: Bookkeeping China is handled fully digitally by our Shanghai team: we keep your books under Chinese GAAP, file the VAT returns on time and prepare tax reports and the annual financial statements, and head office can inspect every receipt at any time. If you need broader accounting services in china, financial accounting and management reports come from the same people.
- Tax and legal support: We answer the recurring questions on corporate income tax, VAT and withholding tax on dividends, and we provide the full range of tax services china demands: registration, filings and support during the annual audit. That keeps tax compliance in china on track all year round. For contract reviews and negotiations, we bring in partner law firms on request.
- Payroll & Human Resources: We run your employees' payroll under Chinese law, register social insurance and housing fund contributions and draw up employment contracts that hold up locally. HR services China at InterGest also cover hiring: when your team is set to grow, we take over the recruitment China demands, searching, screening and onboarding locally.
- Controlling and Reporting: So that head office always knows where its subsidiary stands, we consolidate the figures monthly and prepare the reporting in IFRS or US GAAP logic on request. That is what controlling china means at InterGest: one set of numbers both sides can trust.
- Debtor Management: We issue your invoices, monitor incoming payments and chase overdue accounts, out of court first and with local lawyers if it has to be.
- Administration: On request, we administer your company on a fiduciary basis. We run the bank accounts, manage the cash and take on commercial project management, for instance when a plant is being built or the office moves. A personal accountant in china answers the day-to-day questions.
For the worldwide picture, see the overview of all InterGest services. You have one contact for everything.
Ready for your market entry in China?
When do you start?
How much money do I need to start a business in China?
The total budget comes to around RMB 30,000, just under €4,000. Direct costs for registry fees, chop production and translations account for only about RMB 2,000 of that. The rest goes on certifications, apostilles and project support.
On top of that comes the registered capital, the amount of which you have set yourself since the 2024 reform. If you want to start a company in china, the rule of thumb is to budget the operating needs of the first two to three years; payment is due within five years, in instalments if preferred. The money is not lost, it works as operating capital inside the company.
If you have contributions in kind valued or a trademark registered at the same time, plan an additional RMB 5,000 to 15,000. A breakdown is in the table in the Costs & duration section above.
Can I start a business in China as a foreigner?
Yes. Starting a business in China as a foreigner is exactly what the WFOE was designed for: it is held 100 % by foreign investors, whether natural persons, companies or both. A Chinese co-shareholder is only needed if your sector is on the negative list.
Appearing in person is not a must according to current practice. The exception is the bank: the legal representative's original passport needs to be witnessed at the counter. Some banks accept online identification, and foreign banks also offer appointments at branches outside China.
Important: every Chinese company needs a legal representative, the director or general manager who actually runs the business. Choose this person with care, because he or she signs for the company.
What are the opportunities and threats of doing business in China?
The opportunities lie in the market itself: the world's second-largest economy, supply chains of unmatched density and a pace of product cycles found nowhere else. Companies that adapt their product to the local market, build supplier networks on the ground and protect their brand early are the ones that benefit.
The threats lie in the execution: rising costs for staff and land, local competitors that have caught up technologically, and a regulatory framework that demands planning. The two questions below cover the economic and political risks in detail.
In short: both can be managed, with a local structure, a realistic business plan and a partner who knows the administrative practice.
What is the business registration certificate in China?
It is the international name for the Business License China issues when a company is entered in the China business registry kept by SAMR. With it, the company exists as a legal person; it carries the 18-digit Unified Social Credit Code, in effect the company's registration number in the China commercial register.
What many people do not expect: nothing works without this document. No bank account, no tax number, no employees, no chops. It is the pivot of every formation.
Issuing takes two to three weeks once the file is complete. The real effort lies in the documents beforehand, see the Documents section above.
What are the advantages and disadvantages of a WFOE in China?
Advantages: full control. The parent company holds 100 % of the shares and all voting rights, and profits flow directly to head office after tax. The WFOE is the only legal form with unrestricted capacity to do business, from imports through own production to sales, and since 2024 a single director with no minimum capital is enough.
Disadvantages: it carries all Chinese obligations alone, with no local partner to cushion them. Accounting under Chinese GAAP, the annual audit and currency controls on every cross-border payment are part of the package; sales channels and contacts with the authorities have to be built up from scratch.
If your sector is on the negative list, the joint venture remains the only alternative to the WFOE. The comparison of all forms is in the Legal form section.
What are the economic risks of doing business in China?
Every investor should price in three developments. The costs of staff and land are rising, and the old location advantages are melting away. Local competitors have caught up technologically; a foreign product no longer enjoys an automatic edge. And Chinese customers expect smart, locally adapted products in ever shorter cycles.
The most common strategic mistake follows from this: routing every decision through head office. A company that waits six weeks for the centre to approve a price change misses the market window.
The answer is a subsidiary with a real local mandate and reporting that still gives the parent full transparency. That combination is exactly what InterGest builds.
What are the political risks in China for businesses?
The most relevant points are regulatory: the currency controls applied by SAFE to every cross-border capital flow, rules on transferring data abroad and sector-specific security reviews. Individual sectors remain restricted through the negative list.
Planning makes these risks of doing business in China calculable: treat SAFE registration, approvals and trademark filing as critical path items in the project plan, not as formalities at the end.
InterGest has been observing regulatory developments on the ground since 1994 and knows which announcement has practical consequences and which does not.
How does trademark registration work in China?
Through the China National Intellectual Property Administration, the central IP authority. China grants trademarks on a first-to-file basis: the right goes to whoever files first, not to whoever used the mark first.
Three elements should be filed: the English name, the Chinese rendering and the logo, each in all classes in which you plan to operate. The Chinese translation in particular is often forgotten, and that is precisely where squatters strike.
Tip: file six to twelve months before market entry, not when contracts are being signed. Filing is cheap; buying back a blocked mark is not.
Which authorities are involved when you register a company in China?
The four most important in brief: China company registration runs through SAMR, which issues the Business License. SAFE controls every cross-border capital flow. The tax administration assigns the tax number and manages corporate income tax, VAT and withholding tax. Customs registers companies with import or export business.
The table in the Legal basis section above lists all bodies involved with their respective functions.
InterGest can handle all communication with these bodies: in Chinese, at district level, with the right forms.
Why should I choose InterGest when starting a business in China?
The difference to a pure registration agent: InterGest does not stop after the Business License. Every client has one personal contact covering formation, accounting, taxes, payroll, HR and reporting, with no interfaces between five different providers.
On the ground, this is led by Sam Xiaogang Yuan, who has headed InterGest China since 1994 and knows how to navigate the authorities in Shanghai, Beijing, Kunshan, Guangzhou, Hangzhou, and Wuhan. Over three decades, he has guided several hundred foreign companies into the Chinese market.
Then there is the network: InterGest has been active in over 50 countries since 1972. A company expanding to China can use the same structure later in Singapore, India or Germany. See the overview of all services.