Here’s a practical guide from Enterprise Singapore and our knowledge partner RSM on the nuts and bolts of setting up shop in China. It covers:
To do business in China, one of the first things to consider is your business structure. Different regulations may apply depending on your business structure and activities. Most foreign investors in China set up the following business entities:
Do note that most representative office licences are restricted to non-revenue activities. You may only carry out
marketing, sourcing or investment identification activities. The exception is a Foreign Construction Representative
For a small private company, you need at least one executive director.
Yes, your board can consist of foreign directors only.
Generally, a director, supervisor or senior officer of a WFOE must have the civil capacity for the appointment. The person must not be:
They must be above 18 years old.
Yes, your company can be wholly-owned by foreigners, except for some special industries, which only allow Sino-foreign enterprises. These include but are not limited to market investigation and medical institutions (such as hospitals and clinics).
You need at least one shareholder. It is possible to set up a WFOE with two foreign-owned corporate shareholders.
Yes. The Commissioner of Commerce/Administration of Industry & Commerce needs to approve all the proposed business activities when you apply for a business licence.
Some businesses activities, such as food and beverage businesses, require a special licence. The duration of time needed to obtain these licences varies from case to case.
Yes. You are not allowed to participate in activities such as publishing newspapers and magazines, or telecommunication services. Check out the Negative List of Foreign Direct Investment for the full list of prohibited activities.
There are many business activities that require licenses. You need to apply for certain licences, such as a licence for talent intermediary service, before setting up the company. Others are required after you set up the company, for example, the permit for food operator.
It is not necessary for you to engage a professional firm but it is highly recommended. A professional firm can help you manage the complex processes and frequent changes in requirements when applying for licences.
Generally no, except for some special licenses.
It is a good practice to display your business licence, although this is compulsory only for certain types of businesses.
There are no specific capital requirements for retail businesses or restaurants. However, there are requirements for industries such as labour dispatch, investment management companies and hospitals.
For example, the minimum registered capital is RMB2 million (S$97,600) for a labour dispatch company.
There is no minimum capital requirement for a WFOE/joint venture except in the case where the WFOE/joint venture engages in a special industry.
The longest time frame to pay up the registered capital is within the term of business.
The law in China does not require verification anymore.
It takes about two months.
You can only repatriate your profits after tax clearance.
No. You may only use one type of currency. However, you can change your registered capital from one currency to another.
You need at least two bank accounts:
If these two accounts are opened with a foreign bank, you may be asked to open another account with a domestic bank for tax payment purposes.
You don’t need to keep a minimum capital amount, unless the bank requires it. The full sum of capital can be used for business activities.
In general, it takes two weeks to open a bank account.
This is usually not necessary. But most banks will require your legal representative to meet the banker in person.
The Chinese government may give preferential corporate income tax treatment to the industries and projects they encourage. For example, high-tech companies can enjoy a reduced corporate tax rate at 15%.
Other industries with tax incentives include environmental protection and energy saving industries, high and new technology industries, agriculture, forestry, husbandry and fishery industries.
Local governments provide different types of financial subsidies to new companies.
Other taxes include value-added tax, consumption tax, stamp tax, customs duties and surtaxes and so on, depending on the industry you are in.
Yes. You need to withhold and pay the individual income tax on behalf of your employees every month. You may pay online or at the tax bureau.
You need to pre-pay corporate income tax based on accounting book every quarter and pay online. You also need to perform annual income tax return to reconcile the book to tax adjustment.
Yes, there is a Double Tax Treaty between Singapore and China. Certain tax benefits may apply to your company.
In general, the tax rates are:
Besides salary, you need to provide social benefits, annual leave, public holidays and so on to your employees.
You need to apply for a work permit and a residence permit for the Singaporean employee. The processing time is about two months.
By law, you are not allowed to use another business’ address. The use of a virtual office address depends on city and varies from case to case.