Setting Up a Business in China - Part II Main Procedures

Setting up a Business in China

By Jing Zhang

The procedures of Setting up a foreign capital enterprise are slightly different between cities and there may be some changes from time to time as well.  General sections of establishing a business in China include pre-registration procedure, business registration, tax and fiscal registration and other registrations and certificates.  The time of administrative license review and approval which the Government committing is 90 business days in total.  A general outline of the main procedures is listed below.

 Section 2

Main Procedures

Pre-registration Procedure

 

1          State Administration for Industry and Commerce (SAIC) for pre-registration of the enterprise name. 

After approval, enterprises get “The Notice on the Pre-approval of Enterprise Name”.  A sample is shown below.

 

2          Project approval in relevant examination and approval authority

 

Foreign investors may need to obtain a certificate of project approval from National Development and Reform Commission (NDRC) and complete required examinations conducted by the relevant authorities, but not all of the projects require this step.  In the interview about “Administrative Measures for the Confirmation and Recordation of Foreign-Funded Projects” in 2014, the head of NDRC answered reporters that the “Measures" reformed the management mode of the foreign investment projects approval from overall approval of projects to a combination of limited approval and general records management style.  The projects need to be approval can be checked out in “Foreign Investment Industrial Guidance Catalogue (Revised 2015)” and “the Catalogue of Investment Projects Subject to the Approval of Government (Revised 2014)”. 

 

3          Examination and approval by Ministry of Commerce People's Republic of China (MOFCOM)

 

The foreign capital enterprises in conformity with the conditions listed in related rules and regulations for the implementation[1], get examination and approval by the relevant examination and approval authority authorized by the state council.

 

After approval, enterprises get “Agreed to set up the Company's Approval”.  A sample is shown below.

 

  

Business Registration

 

1          Quality and Technical Supervision Bureau - General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) for Pre-assigned code of Organization Code Certificate

 

2          MOFCOM for Certificate of Approval for Establishment of Enterprises with Foreign Investment in the People’s Republic of China

After Approval, enterprises get “Certificate of Approval for Establishment of Enterprises with Foreign Investment in the People’s Republic of China”.  A sample is shown below.

 

 

3          SAIC for Business Licenses

After approval, enterprises get “Business Licenses” and its duplicates.  The samples of new version are shown on the next page.

 

[After a business license is issued by the SAIC, the foreign capital enterprise is formally established under PRC law and is permitted to commence business operations.]

 

4          Ministry of Public Security (MPS) for the official seals making and registering

Some seals need to be made in designated place and be registered for record.  Some samples are shown below.

 

5          Get Organization Code Certificate in AQSIQ

After approval, enterprises get “Organization Code Certificate” and its duplicates.  The samples are shown on the next page.

 

 

Tax and Fiscal Registration

 

6          Tax registration certificate in both State Administration of Taxation of the People’s Republic of China (SAT) and Local Tax Bureau

After registration, enterprises get certificate of “Tax Registration for Enterprises with Foreign Investment” which sealed by both SAT and Local Tax Bureau and its duplicates.  The samples are shown below.

 

 

 

7          State Administration of Foreign Exchange (SAFE) for Foreign exchange registration

After registration, enterprises get certificate of “Foreign Exchange Registration for Enterprises with Foreign Investment”, the permit for opening foreign currency account.  A sample is shown on the next page.

 

 

8          Bank accounts opening

1)      Foreign currency account

 

According to Article 18 of “Law of the People’s Republic of China on Foreign-Capital Enterprises”, “Enterprises with foreign capital shall handle their foreign exchange transactions in accordance with the state provisions for foreign exchange control. Enterprises with foreign capital shall open an account with the People’s Bank of China or with a bank designated by the state agency exercising foreign exchange control.”

 

2)      RMB accounts

a.      Basic Account (One only)

Basic Account is the main account of a company for daily transfer and settlement of account and cash receipt.  Enterprises should submit required documents to get the permit of opening a basic account as well as to apply for “Organization Credit Code Certificate” from the People’s Bank of China (PBC).  Usually, the bank enterprises apply for basic account opening and putting on record in will go through with the procedure of applying “Account Opening License” and “Organization Credit Code Certificate”.  Samples of “Account Opening License” and “Organization Credit Code Certificate” are shown in order on the next page.

 

 

 

b.      General Accounts (Optional)

 

Enterprises can withdraw cash from the basic account within the limits on number of times and amount, while can only transfer money or use money in checks from the general accounts.

 

9          Local Finance Bureau[2] for fiscal registration

 

According to Article 14 of “Law of the People's Republic of China on Foreign-capital Enterprises”, “An enterprise with foreign capital shall set up account books in China, conduct independent accounting, submit the fiscal reports and statements as required and accept supervision by the financial and tax authorities.”

 

After registration, enterprises get certificate of “Financial Registration for Enterprises with Foreign Investment” and its duplicates.  The samples are shown below.

 

 

10      Local Statistics Bureau[3] for statistical licenses

After registration, enterprises get certificate of “Statistical Registration” and its duplicates.  The samples are shown on the next page.

 

 

 

Other registrations and certificates

Various registrations with local administrative authorities, including customs, labor Bureau and Social security Bureaus, etc.

 

The general process set out above only shows the main procedures of establishing a business in China.  The process may be varied or simplified according to the prevailing local rules and practice and the requirements of any applicable industry regulators.  

 

[1] Regulations for the Implementation of the Law on Sino-foreign Equity Joint Ventures; Detailed Rules for The Implementation of The Law on Wholly Foreign-Owned Enterprises; Detailed Rules for The Implementation of The Law on Sino-Foreign Cooperative Joint Ventures.

[2] Ministry of Finance of the People's Republic of China

[3] National Bureau of Statistics of China