Setting up an entity in China is a major decision that comes with serious liabilities. Deciding to register an entity should come after thorough evaluation. Based on our experiences, most activities in China can be accomplished without a local entity by using outsourcing companies.

Assessing the need

We ask the following questions:

• What is the entity’s purpose?
• What are the entity’s licensing needs?
• Where would be the best place to establish an entity?
• Who would manage the entity?
• What type of entity is required?

Once these questions are answered, Asia Entrygate assists its clients with the entire establishment process, until the company is fully operational (including all necessary financial and HR aspects).

Types of entities that can be registered in China

Wholly Foreign Owned Enterprise (WFOE): A limited liability company wholly owned by the foreign investor/s.

• Requires registered capital and its liability is limited to its equity.
• Can generate income, issue local invoices.
• Can employ an unlimited number of foreign and local employees.
• Pays tax in China and its profit can be repatriated back to the investors’ home country.

Registration Process

Registration of any of the above entities requires thorough preparation. The registration process may take several weeks to several months, depending on entity type and required licenses.

A few milestones that require consideration and planning:

• Choosing a Chinese name for the new entity.
• Preparing, translating and notarizing all relevant documents from the parent company.
• Deciding on company structure and role distribution: GM, Directors, legal representatives, supervisor, CFO, etc.
• Planning the annual budget and matching registered capital to the entity’s needs.
• Opening a bank account in China (normally requires the attendance of the legal representative).

Business System set up in China

Once the entity acquires its business license, several set-up steps need to be implemented, such as:

• Tax and financial software purchase and implementation
• Tax registration account opening at the tax bureau
• Social benefit account registration
• HR procedures set up (employees handbook)
• Financial accounting system set up