How to start a business in China

China has a population of 1,350 billion people and a GNI (Gross National Income) per capita of 5.740 USD. 

Starting a business in China is not easy. 13 procedures and 33 days are necessary before your company can be operational.

Where to address to register your company?

To register your company you need to address the local Administration of Industry and Commerce (AIC).

Here are the steps to starting a business:

1. Receive a company’s name pre-approve  

To get a notice of your business name’s pre-approval you need to address the local Administration of Industry and Commerce (AIC) or go on AIC’s Web site, download the form and submit the application. If your company has more shareholders you can act on their behalf when it comes to advancing the documents but the application needs to bear all partners’ signatures. The dossier required for a company’s registration with the AIC must contain:

-          The application form

-          Business licenses or other registration certificates

-          Photocopies of the shareholders identity cards

If you submit the dossier in person your company’s name can be approved or rejected on spot depending on the name’s availability. If you register your application via mail, fax, email, etc., you will get an approval or rejection on the chosen name within 15 days.

The time need to complete this procedure is 1 working day and is free of charge. 

2. Deposit the initial capital with a bank

After you receive the approval of your company’s name you need to address a bank and deposit the minimum capital required by law. This is around 4.800 USD. This happens if your capital contribution is in cash.
If the initial capital is in nonmonetary assets (no more than 70% of the registered capital) you need to transfer the property titles to your company and have them monetarily assessed by legally established verification institutes.

This procedure requires 1 working day and is free of charge

3. Receive the capital verification report from an auditing firm 

To complete the registration procedure you need to address an auditing firm and obtain the company’s capital verification report.

The procedure will cost you 56 USD and will require 2 working days

4. Obtain the registration certification "business license of enterprise legal person", the organization code certificate from and register for state and local tax with the tax bureau

Since July 2010, you can submit the documents for business license, certificate for quality and technology and state and local tax all at once. You can download the forms from SAIC’s website. The business license is approved first. To obtain it you need the following documents:

-          Application form which you can download from the local government authorities’ Web sites

-          Approval of company’s name

-          Proof of office space

-          Capital verification certificate. For nonmonetary assets you need to present the document that certifies the transfer of property

-          Company’s statues

-          The authorization to represent the company

-          Shareholders and officers identity card

-          Identification documents for the company’s legal representative

-          Other documents

The application for business license requires 15 days to be processed. After the approval is granted you will be issued a “notice on approval for establishment registration” which you can pick up in 10 days

If you file your application by letter, telegraph, telex, fax, email, or electronic data exchange, the Company Registry must decide whether to accept it or not, within 5 days of submission. If the application is incomplete you will be informed within 5 days, of all contents that needs correction.
 

After obtaining the business license you have 30 days to register for the certificate for quality and technology. To obtain the certificate you need to address the Shanghai Organization Code Management Center (a branch of the Quality and Technology Supervision Bureau) and submit the following documents:
• Business license (original and one copy)
• Identity card of the legal representative (one copy)

The registration with local and state taxes requires the following documents (Source: www.doingbusiness.org):

-          Tax registration form and the initial tax reporting form

-           Business license duplicate (original and one copy)

-          Organization code certificate (original and one copy)

-          Identification card of the legal representative (original and one copy)

-          Identification card of the taxation personnel (original and one copy)

-          Company seal and financial seal

-          Office lease agreement and receipt(s) for rent paid

-          Company’s statues (original and one copy) and bank-issued account-opening certificate (original and one copy)

-           Capital verification report

-          Photocopy of property ownership certificate

-          Land use right certificate

-          Commitment letter regarding the authenticity of the documents submitted

This entire procedure takes about 11 days to complete.

5. Get police’s approval to make a the company’s seal

This procedure requires 1 day to be completed. To obtain the approval for making the company’s seal you need to submit your identification card and the duplicate of the business license (the original and one copy)

6. Make the company’s seal

To make the company seal, you need to address a company possessing a Shanghai Special Industry Permit (company seal carving). The seal will cost you around 11 to 48USD, depending on design, quality and complexity.

7. Pay the fee for the organization code certificate

After obtaining the company seal you can address the Quality and Technology Supervision Bureau to pay and pick up your organization’s code certificate. The fee is around 16 USD.

8. Register with the local statistics bureau

Within 30 days of obtaining the business license, you must register your company with the local statistics bureau. To do that you need to file a form together with the following documents:

-           Business license (one copy)

-          Organization code certificate (one copy)

This procedure requires 1 working day to be completed and is free of charge.

9. Open a formal bank account of the company

Once you have opened a formal bank account on your company’s name you need to transfer the registered capital to the new account. The procedure and required documents vary according to your bank’s policies.

10. Obtain the authorization to print or purchase financial invoices/receipts

In order to legally operate your business you must acquire the right to purchase and issue financial invoices/receipts. To do this you need to address the state and local taxation offices and submit a dossier that contains the following documents:

-           Tax registration certificate (one copy)

-          Identity card of taxation personnel (one copy)

-          Application forms

-          Models of invoice seal

This procedure requires 10 working days to be completed and is free of charge.

11. Purchase uniform invoices

To purchase uniform invoices you need to submit an application form to the Tax Office. This is done in order to avoid forgery.

12. Register with local career service center

You must register your employees with the local career service center within 30 days of recruiting. This procedure takes 1 day to be completed and is free of charge.

13. Register with Social Welfare Insurance Center

Within 30 days of operation, you need to register with the local social insurance office for your employees’ social insurance. The dossier must contain:

-          the registration form,

-          the company’s seal,

-          duplicate of business license (original and one copy)

-          organization code certificate (original and one copy)

If the submission is accepted you will have to open a social insurance account for the company at a bank designated by the authorities. Upon receiving the bank’s notification of account opening, the insurance office will issue the social insurance.

This procedure takes 1 working day to complete and it can be done simultaneously with the previous one

Summing up: to open a business in China you need to undergo 13 procedures, wait for 33 days and pay 120 USD in fees.