In this blog, Hongda coversthe top 10 frequently asked questions about foreigners doing business in China. Companies already doing business in China might learn a lot, but the suggestions and insights are also efficient for anyone considering entering the Chinese market.
Hongda is happy to present our new blog series: Top 10 Q&As! In this blog sectopm, we would like to further illustrate to our foreign customers how to deal with matters of business, work, financials, and taxes in China. In each issue, we will summarize the top ten questions and provide detailed answers to the difficulties you may face! In this blog post, we will provide the top ten FAQs about operating a business in China. Also, if you are interested in our other blogs in this series, please click on the titles under here for access to them!
Question 1 : As a foreigner, can I establish a company in China remotely without visiting the country?
Of course, you can. As an investor, you only need to prepare the necessary application materials and mail them to Hongda. You can enjoy the convenience of setting up a company remotely without having to visit China in person. Some documents, such as your identification (e.g., passport) or the establishment documents of the investing company (e.g., business license), need to be notarized. If your country is a member of the Hague Convention, you only need to obtain an Apostille. If your country is not a member of the Hague Convention, then you need to provide notarized documents that have been authenticated by the Chinese embassy for them to be used for establishing your company in China. For more information regarding Apostille, you can read our previous blog.
Question 2: Can I open a bank account remotely?
Yes of course. You will only need to mail your original passport and other application materials to Hongda. You will also need to authorize Hongda as your Chinese representative for offline document submission in person. During the account opening process, the bank will arrange an online video conference with you to verify your intent to open the account. We will contact you to know your convenience in advance!
Question 3: How long will it take to register a company in China?
With our 17 years in business service industry, our experiences have made the entire application process as short as possible. It only takes 5 working days to register your company tarting from the day you sign the registration documents.
Question 4: Does my company necessarily have to be co-formed with a Chinese partner?
No, it is not a must to have a Chinese business partner. Foreigners can indeed register their companies without the help from a Chinese entity. At the same time, your nationality will not restrict your ability to set up a WFOE in China either.
Question 5: Can the registered capital of my company be 1 RMB?
In theory, yes. But we don't suggest that you do so. According to China's foreign exchange control regulations, you can only transfer the number of foreign currencies you have registered as capital from an overseas bank account into the country. Any number beyond that will be considered your company's income and will levy taxes. We kindly suggest you register a reasonable number according to your actual needs. Based on Hongda’s previous experience, at least 100 thousand RMB registration capital is recommended for startup companies.
Question 6: Can the money earned in China be transferred back to your country?
Yes, you can. From an individual perspective, you are only required to submit evidence of the income tax paid to be able to transfer your income to an offshore account. For the business, you can transfer the business' income overseas by paying dividends, interest on loans, royalty payments, and service payment. These are not the only means through which income can be transferred; they could also help in reducing the corporate income tax hence being both achievable. For more information on how companies can do this with their operating income out of China, read our previous blogs about How to Repatriate the Profits Earned in China to Overseas!
Question 7: Do I, as a foreign legal representative for a Chinese company, need to apply for a work visa?
If you need a long-term stay in China, working full-time for your own company, you'll need a work visa for China. In cases where only a temporary stay in China is needed for routine business matters, such as attending company meetings or visiting clients, an M visa or F visa shall be acceptable. In other words, whether you, as the legal representative of some Chinese company in France, need to get a Chinese visa depends on how many days you will stay in China. Therefore, not all foreign legal representatives must get a Chinese visa.
Question 8: Is the legal representative required to stay in China through the business period?
No, the legal representative does not have to stay in China; this depends on the actual business needs of your corporation.
Question 9: Which industries are foreigners not allowed to invest in?
The Chinese Ministry of Commerce released a Negative List for Foreign Investment Access, which shows the areas where commerce invested by a foreigner is either restricted or prohibited. Typically, the general trade, consulting services, and manufacture of commodities are allowed. In a word, unless your business activities fall into one of the categories listed on the Negative List, you may establish your own foreign-invested enterprise. If you would like to receive the complete list, just send your request or book a free consultation with us, and we will be glad to provide you more details.
Question 10: How should a company be managed after registration?
You should have in mind tax and financial regulations while running a company in China. Firstly, your company has to declare and pay income and other associated taxes on a monthly, quarterly, and annual basis, and your company is also required to prepare financial statements and other documents necessary to complete the yearly inspection of your company. It is also required to open a social security account to provide social insurance for your regular staff, if there are any. Click here to learn essential matters and timelines you need to know for annual company management.
Conclusion
Although difficulties are inevitable, the opportunities within this rapidly expanding economy are tremendous and can be very rewarding with preparation and flexibility. By staying current on all developments, forming sound local partnerships, and being flexible, foreign firms can easily fit within a dynamic Chinese marketplace.
We hope that the blog by Hongda cleared up some confusions about setting up a company and starting your business in China. Whether you are already operating in China, or looking forward to starting your own WFOE here, we will provide you with comprehensive services that will help you conduct your business more smoothly. For further questions, feel free to contact us!
