How to Start Your Import and Export Business in China
With a population of 1.4 billion, China presents immense opportunities for foreign investors, particularly in the import and export industry. China is a global economic leader and a prime destination for investors.
Setting up a trading presence in China is strategic for foreign companies, though the process can be complex. This guide will walk you through each step, ensuring your business is established smoothly and in full compliance with Chinese regulations.
1. Choose the Right Business Structure
When setting up an import-export business in China, choosing the right business structure is essential. Below are the key options available for foreign investors.
（1）Wholly Foreign-Owned Enterprise (WFOE)
A Wholly Foreign-Owned Enterprise (WFOE) in China is a business entity fully owned by foreign investors, either foreign individuals or companies. It is usually set up as a limited liability company (LLC) and can have one or multiple shareholders.
While a single-shareholder LLC can maximize the control over the company, we still recommend a multi-shareholder setup. According to Article 23(3) of the Company Law, if a single-shareholder LLC cannot prove its assets are separate from its shareholder’s own assets, the shareholder shall be liable for the company’s debts. A multi-shareholder structure offers better protection of the shareholder’s own property against business risks of the company.
- Benefits of a WFOE
Operate independently and engage in trade activities without the need for a local partner. It provides complete managerial and operational autonomy, enabling you to run your business according to your strategies and objectives. No restrictions like representative office.
（2）Joint Venture (JV)
A joint venture (JV) is a type of limited liability company where a foreign investor partners with a Chinese company. This arrangement allows foreign businesses to leverage local expertise and resources while sharing management responsibilities.
- Benefits of Joint Venture (JV)
A joint venture facilitates quick market entry in China by leveraging a local partner’s expertise, distribution networks, and sales channels, helping to overcome typical entry challenges.However, this approach also requires giving up some control to your partner.
（3）Representative Office (RO)
A Representative Office (RO) is a cost-effective choice mainly utilized for market research, promotion, and liaison activities. It enables you to establish a presence in China and cultivate relationships, but it cannot engage in direct profit-generating activities or conduct business transactions. This structure is ideal for companies seeking to explore the market or promote their products without immediate plans for direct trade.
- Benefits of Representative Office (RO)
Exploring market opportunities, particularly for small companies with limited budgets.
Assessing the potential for expansion into China without making a full commitment.
Creating a foundational presence for activities such as quality assurance and supplier communication.
2. Choose Your Company Name for Approval
The first essential step in registering a company in China is choosing a distinctive business name that aligns with Chinese naming conventions and accurately represents your brand. It’s important to ensure that your chosen name is not already in use or registered by another entity.
Once you’ve finalized your business name, you must submit it for approval to the State Administration for Market Regulation (SAMR). This process confirms that the name meets regulatory standards and does not conflict with existing trademarks. The SAMR will review your submission to ensure compliance, making this step vital for your company’s registration.
By carefully selecting and obtaining approval for your business name, you lay the groundwork for a successful registration while adhering to Chinese regulations. Working with an experienced consultant can further streamline this process, helping your business thrive in China’s dynamic economy.
3. Determine the legal representative, directors, supervisor, financial person
When registering a company in China, you must provide details for the legal representative, director, supervisor, and financial officer, including their name, ID or passport copy, and contact information.
The director and supervisor must be different individuals. According to the latest company law, for the small-size LLC or the LLC with a small number of shareholders, the company may not have a supervisor.
Furthermore, Chinese law mandates the appointment of a Chinese Finance Officer for foreign-owned businesses. This officer, who must be a Chinese national, will handle accounting tasks and report financial performance to the relevant government bureau.
4. Determine the registered address
When registering a company in China, a physical office isn’t required—you can use a virtual address. We offer a free virtual registered address with our company registration services.
However, import-export businesses seeking an export tax rebate will need a physical office, as tax authorities must verify your business’s physical presence to approve the rebate.
5. Preparing Essential Documentation
Previously, registering a company in China involved thorough preparation and the submission of essential documents, such as the Articles of Association, Shareholder Resolutions, and Board Resolutions, appointment letter, etc.
Now, the online registration system streamlines this process by automatically creating these documents based on the information you enter.
Nonetheless, we still advise drafting a comprehensive Articles of Association, as it outlines your company’s purpose, structure, governance, and operational procedures. This document specifies management roles and responsibilities and acts as the cornerstone of your company’s operations.
6. Register Your Company with SAMR
Most State Administration for Market Regulation (SAMR) offices in China now allow online company registration. However, if the shareholders are foreign, you should consult the local industry and commerce bureau to check if online registration is permitted. In Shanghai, foreign individual shareholders can usually register online if he or she has a real-name certified cell phone number and a personal bank card in China.
If online registration isn’t possible, you must submit offline registration documents for SAMR review. The SAMR will assess these documents for regulatory compliance. Once approved, you will receive your business license, allowing your company to operate legally in China and comply with local regulations.
7. Apply For Company Stamp
During incorporation, you must apply for a company seal and file it with the Public Security Bureau (PSB) at the same time. In China, these chops serve as your company’s official seal, similar to a signature in Western countries. Without a company chop, you cannot validate or execute contracts, making this registration crucial for ensuring your business transactions and legal documents are legally binding.
8. Open Bank Accounts of Company
Establishing the appropriate bank accounts is vital for effectively managing your company’s finances in China. Here’s a brief overview of the key accounts you’ll require:
（1）RMB Bank Account
This account is necessary for receiving payments in Chinese Yuan (RMB) and can also accept foreign currency deposits from international clients, following the bank’s guidelines for settlement.
（2）USD Bank Account
Open a USD bank account to facilitate transactions in U.S. dollars. This account makes it easy to accept and make payments in USD, enhancing your cross-border trade.
（3）Capital Bank Account
A Capital Bank Account is essential for receiving contributed capital from the shareholders’ overseas bank accounts.
9. Online Tax Registration
Once your company is registered and your bank account is established, the next step is to register with the local tax bureau and obtain a tax identification number.
Corporate Income Tax: This tax is imposed on profits at a standard rate of 25%. However, the corporate income tax can be reduced to as low as 5% under certain conditions.
Value Added Tax (VAT): VAT rates vary by industry and range from 1% to 13%.
10. Customs Registration
To conduct import and export trade, you must register as the import and export consignee and consignor in the China International Trade Single Window, also known as the Customs filing.
After registering, you’ll need to apply for an electronic port card, allowing you to perform various online operations for your trade activities.
11. Apply for Additional Licenses and Permits
Depending on the type of goods you plan to trade, you may need extra licenses or permits. For instance, importing food products requires food safety certifications, while hazardous materials need specific environmental permits. Additionally, selling hazardous chemicals requires a hazardous chemicals license.
12. Apply for Work Permit
After successfully registering your company, you can apply for work permits for your foreign employees. In China, foreign work permits are divided into three categories:
- Class A: High-end talents, with permits valid for up to five years.
- Class B: Professionals, with permits valid for up to two years.
- Class C: Other talents, which are subject to strict quotas.
Depending on the specific circumstances of your foreign workers, your company can apply for the appropriate work permits. This will ensure that your foreign employees are legally authorized to work in China and will simplify their entry and exit from the country.
Conclusion
By meticulously following these steps, foreign investors can successfully establish a compliant and operational export-import company in China. With a strong foundation in place, your business will be poised to thrive in China’s vast and dynamic market. Our expertise offers comprehensive support to meet all your business needs.
Feel free to contact us if you would like to know more information about starting your import and export business in China.
Besides, if you need other information about import and export information in the world, you can visit Globy.com, we also published our article in this platform.
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
How to Acquire Resident Permit in China Without A Job?
Exploring legal residence options for foreigners in China can be challenging without conventional pathways such as employment or family ties. However, establishing a company and applying for a work permit and residence permit presents a viable alternative.
By leveraging entrepreneurial endeavors, individuals can not only secure legal residency but also engage in business activities within China’s dynamic market. Collaboration with legal experts and thorough preparation are essential for meeting regulatory requirements successfully. Through strategic planning and adherence to relevant statutes, foreign individuals can realize their aspirations for long-term residency in China while contributing to its flourishing business environment.
Step 1: Register A Company
There are several notable advantages to applying for a visa through the establishment of one’s own company. Firstly, pursuing a visa in conjunction with company ownership offers a more pragmatic and rational approach, aligning one’s residency status directly with their entrepreneurial endeavors.
Secondly, the process of visa renewal is often streamlined and expedited for individuals who are registered business owners, facilitating smoother transitions and continuity of residency. Moreover, fulfilling certain predetermined criteria within the framework of business ownership can lead to eligibility for permanent residency status, providing a pathway to long-term settlement in the host country. You may have the following inquiries regarding the specifics of launching a company, such as
- Q1: Do expatriates need to be present during the process of starting a company? Can it be handled online?
Expatriates who possess a real-name certified cell phone number and bank card have the option to complete the process online.
- Q2: How long does it take for a foreigner to start a company in China?
Usually only about 2 weeks to register a company.
- Q3: Is it possible for a company to be established by a single individual?
The establishment of a company requires of three distinct roles:
Firstly, at least one shareholder, who may concurrently serve as the legal representative, is indispensable.
Additionally, a supervisor and an individual who is responsible for the financial matters of the company are imperative.
It is pivotal to note that the roles of supervisor and financial person must be held by distinct individuals, precluding the possibility of a single person occupying both positions. Furthermore, it is stipulated that the accountant person must not be a foreigner who cannot speak Chinese.
- Q4: Can we forgo the appointment of the supervisor?
Under the impending new”Company Law,” scheduled for implementation on July 1, 2024, a notable change pertains to the governance structure of limited liability companies with fewer shareholders.
Specifically, according to the revised provisions, smaller limited liability companies, characterized by a reduced number of shareholders, will have the option to forgo the appointment of a supervisor. This exemption is contingent upon unanimous consent among all shareholders.
- Q5: Is the registered capital required to be fully paid in at once?
According to the amended Company Law, effective from July 1, 2024, shareholders are mandated to fully pay up their contributed capital within five years from the company’s incorporation date, as stipulated in the company’s articles of association. This requirement replaces the previous provision under the current company law, wherein the payment of registered capital was not obligatory at the time of incorporation.
- Q6: What are the liabilities of shareholders?
Shareholders typically assume limited liability concerning the company’s debts, restricted to the extent of their subscribed capital contributions.
However, in cases where the sole shareholder limited liability company fails to demonstrate the autonomy of the company’s assets from the shareholder’s personal assets, the sole shareholder may be subject to joint and several liabilities for the company’s debts.
Consequently, we strongly advise registering a company with two or more shareholders to mitigate such risks and uphold prudent corporate governance.
- Q7: Do foreigners’ passports and other materials need to be notarized and certified?
In the company registration process, there is no requirement for notarizing or certifying passports or any other documentation. However, for the application of a work permit, it is mandatory to provide a non-criminal record and education certificate that have been notarized with apostille certification.
- Q8: Following the company’s successful registration, what additional tasks must be completed?
To establish your company effectively, several essential steps must be taken, including applying for an official seal, opening a company bank account, registering tax certificate, and engaging the services of an accountant to provide assistance with financial matters. These steps collectively ensure the smooth operation and compliance of your company with regulatory requirements.
Step 2: Apply for Work Permit
Upon successful registration of the company, individuals can proceed to apply for a work permit. It’s important to note that various categories of work permits entail distinct application requirements. Therefore, applicants should meticulously review and adhere to the specific prerequisites outlined for their respective work permit classifications.
- Q1: What type of work permit am I eligible to apply for?
In China, foreign workers are categorized primarily into three classifications:
Class A for high-end talents, Class B for professionals, and Class C for other talents. While a strict quota management system is commonly enforced for Class C individuals across most regions, the application process typically prioritizes Class A and B categories.
For Class A high-end talents, the option exists to apply for a work permit valid for up to five years, offering an extended period of employment eligibility.
Conversely, Class B professionals may apply for a work permit with a maximum duration of two years, providing flexibility within the regulatory framework for their employment arrangements.
- Q2: What’s the duration for work permit during the initial application, and is it possible to extend or renew afterward?
Under ordinary conditions, an initial period of six months is typically granted for the issuance of a work permit. However, in cases where the applicant exhibits high qualifications, an initial period of one year may be approved. Furthermore, renewal of the work permit can be sought up to 30 days before its expiration date, facilitating a smooth continuation of employment arrangements.
- Q3: What does the process entail when applying for a work permit?
When applying for a work permit from outside of China, the company initiates the process by submitting the application and relevant documents through the online Service System for Foreigners Working in China.
Subsequently, upon approval, the company receives the Notification Letter of Foreigner’s Work Permit. Foreign nationals utilize this notification letter to apply for a work visa in their respective country. Following the acquisition of the work visa and entry into China, individuals proceed to apply for the formal work permit.
- Q4: What is the typical timeframe required for completion?
The application process for the Notification Letter of Foreigner’s Work Permit typically involves a timeframe of approximately 5-10 business days for completion.
Similarly, the application for the formal work permit also requires a timeline of approximately 5-10 business days.
- Q5: Is it possible to apply for a work permit without possessing a bachelor’s degree or higher education, or evidence of relevant professional qualifications?
Certainly. As a shareholder in the company being registered, individuals have the opportunity to apply for a visa as an investor. Notably, this process does not necessitate the submission of additional documents such as diplomas, certificates, or employment contracts.
- Q6: Which documents are necessary for an investor’s application of work permit?
You need a copy of the original business license and other documents proving that you are an investor, passport, certificate of no criminal record and medical certificate.
- Q7: What are the drawbacks of seeking a work permit as an investor?
During the renewal process of a work permit, the entry and exit bureau conducts a comprehensive review to ensure the continued normal operation of the company and the ongoing status of the applicant as the company’s investor. The assessment of the company’s normal operation primarily focuses on the regular payment of Value Added Tax (VAT).
- Q9: What should an applicant do if uncertain whether the company will settle VAT within six months of the initial application?
We advise you to pursue the application for a work permit as an employee of your company. However, it’s important to note that the eligibility criteria typically require candidates to possess a bachelor’s degree or higher educational qualification, along with relevant work experience.
- Q10: Which documents are required when applying for a work permit as an employee?
The application for a work permit entails the submission of the following documents:
(1) Completed Application Form for Work Permit;
(2) Valid passport;
(3) Non-criminal record certificate;
(4) Certificate of highest academic qualification (bachelor’s degree or above) or other professional qualifications;
(5) Certificate of work experience covering the last two years;
(6) Employment contract;
(7) Medical certificate;
(8) Electronic photo;
(9) Original photo.
Step 3: Apply for Resident Permit
- Q1: Where can I apply for a residence permit? Can I apply online?
Residence permits are exclusively obtainable through in-person applications at the Immigration Office located within each district.
Unlike other processes, online applications are not available for residence permits, it requires applicants to submit their requests offline, in accordance with the prescribed procedures.
- Q2: What documents are required to apply for a work-related residence permit?
The essential documents are:
(1) original passport;
(2) work visa;
(3) temporary accommodation registration form;
(4) medical report;
(5) work permit;
(6) company application letter;
(7) individual application letter;
(8) company business license.
- Q3: What’s the typical duration taken to complete the process?
It normally can take up to 10 working days but in some cases two weeks.
- Q4: How long will I be granted for residence permit?
Normally the period will be the same with work permit
If you have any inquiries regarding the specifics of launching a company, please feel free to contact us.
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
