There are several unique advantages of setting up a company in China. To help entrepreneurs with this, we will discuss major methods of setting up business such as Wholly Foreign-Owned Enterprises (WFOEs), Joint Ventures, and Representative Offices and we will also discuss the entire procedure of China company registration.
Benefits of Registering Your Company in China
With exponential growth in China, where it can attract Fortune 500 companies and a huge market of 1.3 billion people. It is the world’s fastest growing economy with opportunities across agricultural, Information and communication technology (ICT) and many others.
China Company Registration: Business Formation Options for Foreigners
Wholly Foreign-Owned Enterprise (WFOE)
- Wholly Foreign-Owned Company.
- Enables the company to have complete control in operations, decision making and hiring. For HR administration and payroll service in China, consult FastLane.
- Perfect Presence in China and Trademark Protection.
- A limited liability company formed with a Chinese partner holding over 50% of shares.
- Enables quick market entry through local knowledge and resources.
- Necessitates some control-sharing with the Chinese partner.
- The most basic form of business formation, but only set for non-profit actions such as market research and customer support.
- Appropriate for marketing exploration, smaller businesses, or presence needs.
The Complete Procedure for China Company Registration
To establish a WFOE, follow the recommended steps:
Choose an Agency
In this respect, it requires working with a professional agency.
Agencies help to ensure legality in contracting, documentation services necessary on an ongoing basis in a company’s lifecycle such as payroll, bookkeeping and tax advice.
Select the Company Scope
For those companies wishing to know in which sectors the government encourages investment, can refer to the Catalog for the Guidance of Foreign Investment Industries.
Prepare Required Documents
Company registration requires approval of company name, listing of controlling partners, detailed provision on the managerial structure of the firm, the legal address of the organization, Articles of Association, registered capital, and a comprehensive feasibility study for justification.
Apply for Approval Certificate:
Apply for Business License:
Additional licenses may be necessary depending on your business niche, such as manufacturing or food.
Register with the local Public Security Bureau (PSB):
Registration with the PSB is crucial for acquiring company chops, equivalent to a signature in China.
Open a Bank Account:
A Chinese bank account is essential for conducting business transactions and financial operations.
Register at the Tax Bureau:
All companies in China (including WFOEs) are regulated by tax rules that touch on corporate income tax, transaction tax, customs duties, VAT as well as personal income tax.
Comparing China and Singapore for Company Registration
When evaluating China and Singapore for company registration, consider key factors:
Singapore allows 100% foreign shareholding and imposes no restrictions on business activities. China permits WFOEs but has limitations on business activities, categorized as “encouraged,” “restricted,” or “prohibited.”
Minimum Statutory Requirements
Singapore will need to have an address within the country, one resident director, one company secretary, between 1 to 50 shareholders, as well as a minimum capital amount of SGD 1.00.
You will require having a commercial address, one or multiple directors, up to 50 foreign shareholders, a legal representative, a General Manager, a supervisor, and minimum registered capital ranging from 100,000 up to 1,000,000.
Singapore offers a streamlined, fully computerized company registration process completed within 24 hours.
Company incorporation in China is complex, involving multiple procedures, often taking 2-3 months to obtain approvals.
Singapore charges corporate tax rates of approximately 8.5% for profits up to S$300K and 17% for profits above S$300K, with a 7% GST.
China’s standard corporate tax rate is 25%, with potential reductions for businesses in “encouraged” sectors. VAT rates in China vary by industry. If you need taxation service, talk to FastLane. We specialize in providing taxation services for Foreign companies in China.
Annual Filing Requirements:
Singapore requires that companies submit an Annual Return for filing at the Company’s Registrar and an Income Tax Return for submission to the Singapore tax department every year. Audited accounts will not be submitted with returns by small companies.
Companies in China have to provide to the tax department monthly, quarterly and annual income tax returns together with audited accounts. Also, a WFOE should provide an audited annual report for annual inspection by some departments in the Chinese government. Every single company must be audited.
There are several benefits of setting up a company in China including broad market, booming economy and multiple business opportunities. On the other hand, the registration method may not be straightforward, requiring expert agency guidance. Consider the business objectives carefully before deciding on the most applicable jurisdiction for registration of a company.