How to Do Business in China: Starting Operations

05 China Company Registration for Foreign Investors

Establishing a company in China can give a foreign business a local legal presence for hiring employees, signing contracts, invoicing customers and conducting day-to-day operations. The registration application is only one part of the process. Investors should first confirm that the proposed activities, ownership structure, registered address and funding plan fit the business model.

Plan the structure before filing

Foreign investors commonly consider a wholly foreign-owned company or a joint venture with a Chinese partner. The right structure depends on the permitted level of foreign ownership, the need for a local partner, the company’s planned activities and how the business will be funded. A representative office may suit limited liaison or market research, but it is generally not a vehicle for conducting revenue-generating business.

Before filing, investors should plan the company’s Chinese name, business scope, registered address, shareholders, management, articles of association and registered capital. A limited liability company’s shareholders generally must pay their subscribed capital contributions within five years of its establishment, subject to applicable exceptions. The registered capital should therefore be set with the company’s real funding needs and contribution schedule in mind.

Prepare and submit the registration documents

A registration file commonly includes the company’s articles of association, shareholder identity or qualification documents, appointment documents for directors and other officers, and documents relating to the registered premises. Foreign shareholder documents must meet the relevant registration authority’s requirements; depending on the document and place of issue, authentication and Chinese translation may be required.

Company registration is handled through the competent market regulation authority. Foreign-investment information is also reported through the enterprise registration and credit information systems. If the proposed business requires an industry approval before registration, that approval must be considered as part of the filing sequence.

Plan for the company to become operational

After the business licence is issued, the company may still need to arrange its company chops, tax and invoicing matters, bank and foreign-exchange arrangements, accounting, employment and social insurance. Importers, exporters and regulated businesses may also need customs registration or sector-specific permits.

The best time to resolve questions about ownership, business scope and premises is before signing a lease or committing funds. KINGBRIDGE Law Firm can help assess the proposed business model, prepare the registration plan and coordinate the steps needed to establish the company.

06 Registered Capital, Funding and Moving Money Across Borders

Foreign investors should plan how a China subsidiary will be funded before incorporation. The registered-capital figure, payment schedule, shareholder-loan arrangements and expected cash needs affect both the company’s operations and the investor’s legal obligations.

Set capital by reference to the business plan

For a limited liability company, registered capital is the total capital contribution subscribed by its shareholders and recorded with the registration authority. Under the current Company Law, contributions are generally due within five years after establishment, unless a special rule applies. The articles of association should state each shareholder’s contribution amount, form and payment deadline.

Capital may be contributed in cash or, where legally eligible and properly valued and transferred, certain non-cash assets. Investors should ensure that the proposed contribution method is workable in practice and supported by the necessary valuation, ownership and transfer documents. Capital should be calibrated to expected launch costs, licensing requirements, staffing, leases and operating losses rather than chosen arbitrarily.

Choose the right funding route

Depending on the corporate documents, financing plan and applicable foreign-exchange rules, a foreign shareholder may fund the business through registered capital, a shareholder loan or other permitted arrangements. These routes have different accounting, tax, repayment and foreign-exchange consequences. Intercompany service fees, royalties, interest and purchase payments also need genuine commercial support and appropriate contracts, invoices and tax treatment.

China’s foreign-exchange framework does not mean that funds can be moved without supporting documents. Banks review cross-border receipts and payments under applicable rules and their compliance procedures. The company should plan in advance for the documents needed to receive capital, pay overseas suppliers, make permitted loan repayments or distribute profits.

Plan for profit distributions and repatriation

Foreign investors may transfer lawful investment income and proceeds in or out of China in renminbi or foreign currency, subject to applicable laws and procedures. A dividend is not simply a transfer of cash: the company must have distributable profits and satisfy corporate, accounting, tax and bank documentation requirements. The company should retain evidence of its financial statements, tax status, shareholder approvals and the legal basis for the remittance.

Funding, tax and foreign-exchange rules can depend on the company’s specific structure, transaction and location. A foreign parent should coordinate its legal, finance and tax advisers before signing a funding document or making a cross-border payment.

How we can help: We advise on registered-capital planning, shareholder funding documents, intercompany arrangements, dividend procedures and the legal documents commonly requested for cross-border payments.

07 After Incorporation: A China Subsidiary’s First Compliance Steps

Receiving a Chinese business licence is an important milestone, but it is only the beginning of operating a company in China. A newly established foreign-invested enterprise (FIE) should promptly put its corporate, tax, banking and reporting arrangements in place and confirm whether its business requires additional licences or registrations.

Put the company’s governance in working order

The company’s articles of association, shareholder decisions and appointment documents should match the agreed ownership and management structure. The company should establish a clear process for shareholder and board-level decisions, signing authority, use of company chops, contract approval and record keeping. Foreign shareholders should also keep corporate documents, powers of attorney and changes to directors or legal representatives current and properly filed where required.

Registered capital should be set with the company’s actual business plan in mind. Under the current Company Law, shareholders of a limited liability company generally pay their subscribed contributions within five years after establishment, subject to special rules for particular industries and transitional rules for existing companies. A large figure should not be selected simply to create an appearance of strength: it creates a real contribution obligation.

Complete tax, banking and reporting setup

The company will need to complete tax-related onboarding, establish accounting and invoice processes, and open the bank accounts required for its business and capital flows. It should agree with its accountant on tax filing calendars, invoice controls, bookkeeping responsibilities and the documents needed for inbound capital, intercompany payments and profit distributions.

Foreign-investment information reporting is generally integrated with company registration and the National Enterprise Credit Information Publicity System. FIEs may need initial, change, cancellation and annual reports, with annual reporting commonly made during the January-to-June reporting window. Companies and partnerships should also assess their beneficial-owner information filing obligations and whether a narrow exemption applies.

The company should check its annual public-reporting duties, including the annual report filed through the national enterprise credit system. The scope of the report and the local filing portal should be confirmed for the company’s registration location.

Confirm the business may begin operating

The business scope on the licence does not replace sector-specific permission. Depending on the actual activity, the company may need a pre-operation or post-registration permit, industry qualification, product filing, premises approval or other regulator-facing step. The foreign-investment negative list is only one part of the analysis: domestic market-access rules and general licensing requirements can apply to foreign and domestic businesses alike.

Foreign investors should also check whether the investment triggers a project filing or approval, a national-security review, or merger-control review. These reviews are separate from company registration.

How we can help: We assist foreign investors with incorporation, corporate governance documents, foreign-investment reporting, licence mapping and a practical post-registration compliance checklist tailored to the proposed business.

08 Essential Contracts for Foreign Companies Doing Business in China

Contracts help define responsibilities before a problem arises. For foreign companies hiring staff, buying from Chinese suppliers or sharing product and customer information, the agreement should fit the transaction and identify the correct contracting parties.

Employment contracts

An employer establishing a labour relationship in China must enter into a written labour contract. If the relationship begins before the written contract is signed, the contract should generally be concluded within one month. The agreement should address matters such as the role and work location, term, working hours, remuneration, social insurance and working conditions.

A translated overseas employment template may not reflect mandatory Chinese requirements or the company’s actual HR practices. Businesses should also consider related documents, including confidentiality provisions, employee policies and lawful post-employment restrictions.

Sales and supply contracts

A sales contract should clearly identify the products, quantity, quality standards, price, payment terms, delivery arrangements, inspection process and the consequences of late, defective or incomplete performance. For cross-border trade, the agreement should also address shipping and insurance responsibilities, transfer of risk, product compliance, intellectual property and the language and dispute-resolution provisions.

China’s Civil Code lists matters such as the subject matter, quantity, quality, price, delivery, packaging, inspection and settlement method among the typical terms of a sales contract. Clear inspection procedures and deadlines can be especially important when goods are manufactured, sampled and shipped across borders.

NNN and NDA agreements

An NDA focuses on keeping confidential information from being disclosed. An NNN agreement adds restrictions on using the information outside the agreed purpose and bypassing the business relationship—for example, by dealing directly with a protected customer or supplier. These agreements are often considered before sharing designs, samples, product specifications, supplier details or pricing with a Chinese manufacturer.

The agreement should define the protected information, permitted use, covered parties, exclusions, duration and remedies. Under China’s Anti-Unfair Competition Law, trade-secret protection is linked to taking confidentiality measures, so contractual language should be supported by practical steps such as limiting access and marking sensitive materials.