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:
It generally takes about 2 to 3 months from the submission of all required documents to the relevant authorities.
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 education 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 relevant government authorities including Ministry of Commerce, State Administration for Market Regulation and State Administration of Industry & Commerce need to approve all the proposed business activities when you apply for a business licence.
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.
All entities are required to have a business licence before operating in China. You need to apply for additional licence(s) depending on the business scope and industry. For example, businesses in food and beverages, require special licences/permits. The duration of time needed to obtain these licences varies from case to case.
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 licences.
It is a good practice to display your business licence, although this is compulsory only for certain types of businesses.
There is no minimum capital requirement for a WFOE/JV except in the case where the WFOE/JV engages in a special industry.
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.
The longest time frame to pay up the registered capital is within the term of business.
The law in China does not require verification.
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.
Local governments provide different types of financial subsidies to new companies.
Other taxes include value-added tax, consumption tax, stamp tax, customs duties, land appreciation tax, deed tax, 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 with the local tax bureau.
You need to pre-pay corporate income tax based on accounting book within 15 days after the end of each quarter. You also need to perform annual income tax return within 5 months after the end of the tax year, 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 withholding taxes on interest, royalties and dividends are 10%. Tax rates may be further reduced under the Singapore-China Double Tax Treaty.
The key procedures include creating a labour contract with staff members, processing employment registration and monthly salary, filing individual income tax and registering social benefits.
Besides salary, you need to make contributions to social security schemes, which include pension, unemployment, medical, work-related injury, maternity and housing fund 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, but detailed timeline differs according to local requirements in each city/region.
By law, you are not allowed to use another business’ address. The use of a virtual office address depends on each city/region and varies from case to case.