Since the COVID-19 pandemic hit it has become more important than ever for foreign investors to manage their Chinese companies remotely from abroad. With increased demand for Chinese goods, despite the lack of access to China due to the strict border controls that prevent the majority of travel to the country, many companies are still trading and need to be managed. So how can you achieve this from your country?
Managing Chinese companies remotely Q&A
Here are some questions we've been asked recently from foreign investors whose business interests in China have been impacted by their inability to visit.
We answer them in turn to give you some ideas about the tasks you might face and how to handle them remotely in order to remain compliant.
I was able to set up my company before COVID hit, but our legal representative was never able to visit China in person to set up a business bank account and so we've never been able to start trading. What can we do?
In the case of certain areas, such as Shanghai and Hainan, it is now possible for the legal representative to send their passport to China and open the company bank account from abroad. Local banks may approve applications like this made remotely, and, in the case of our company, this is made possible due to our longstanding relationships with them.
Note: When shipping your passport to China it's better to use global couriers such as DHL or Fedex.
If you need help to open your Chinese business bank account, please contact us - we can handle this for you.
I set up a Chinese company in 2019, but due to covid I have not set up a business bank account yet and have not started trading. What responsibilities do I have?
Some foreign investors are confused about if a company which is not yet trading in China has any responsibilities. You need to be aware that it does. You will still need to file for tax, in this case zero RMB. Therefore, you will need an accountant in China to help file your tax with the local authorities, even if you aren't declaring aything.
I want to do business in China but can't visit China to set up a company for the foreseeable future, is it even possible at all right now?
Yes, in Hainan it's possible to set up both companies and business bank accounts fully remotely.
You will still need to go through the usual procedures and provide the paperwork needed to open a WFOE, but it can all be handled without you needing to visit Hainan in person.
👉 Read this: To explore what's required to open a WFO, read our WFOE checklist.
My Chinese company is trading, but I'm not able to go to the bank in China to perform the foreign currency settlement (this means receiving, say, USD from an American parent company or when a foreign customer pays your Chinese company). How can this be achieved if I'm not in China?
You need to send someone representing your company to the bank to handle the settlement. They need to be in possession of all the relevant paperwork and the legal representative's stamp. Hongda regularly does this for our customers who use our accounting service which includes cashier work like this.
My Chinese company has been trading for over a year now. I've been told that I need to do an annual return? Is this as straightforward as a tax return in my country and how can I handle this if I'm not in China?
Yes, you definitely need to do an annual return, but you need to be aware that in China this is usually known as the 'annual joint inspection' which includes a number of items (which are not just tax-related):
1. Audit report 审计报告
2. Tax Annual return 汇算清缴
3. Commercial Bureau Annual Report 企业年检报告
4. EITC Annual Report 外商投资年度汇报
5. Foreign Currency Report 外汇年度汇报
6. Tax inspection 税审报告
So if your company has been trading for over 1 year these are the responsibilities you'll have in the annual return (it may vary for companies who aren't currently trading).
You will need a Chinese accountant to handle this for you - if they have not made you aware of it then this is a cause for concern and you will need to check if they're on top of it.
In most cases, the accountant can handle all of the above for you and you will not need to get involved.
If you're unsure if you can take care of the annual return, let us know, our team of experts can help handle your accounting in China.
How about you?
Have you been affected by the travel restrictions to China? Are any of these questions similar to what's facing your company? Let us know and we'll be happy to respond with some advice for your situation.