Set up and run your company in mainland China

01 · ChinaMNC

Why China, and why structure matters first

China remains one of the largest consumer and manufacturing markets in the world, and many foreign founders are drawn by supply chain depth, engineering talent and the scale of domestic demand. But entering as a foreign investor is not a single act. It is a chain of registrations, approvals and ongoing obligations, and the shape of that chain depends on what you intend to do.

The Foreign Investment Law and the national negative list determine whether your sector is open, restricted or prohibited to foreign ownership. Sectors on the negative list may require extra approvals or a local partner; sectors off the list generally follow a more predictable filing path. Your city also matters: municipal authorities interpret and administer rules, so practices in Shanghai, Shenzhen, Beijing and smaller cities can differ in detail even when national law is the same.

Before choosing an entity, be clear about three things: who your customers are, whether you need to invoice in RMB, and whether you will employ staff directly. Those answers usually decide whether you need a full operating company, a lighter representative presence, or a partnership structure. Getting this right early avoids costly restructuring later.

02 · ChinaMNC

WFOE, joint venture or representative office

The wholly foreign-owned enterprise (WFOE) is the default choice for most foreign founders. It is a limited liability company owned entirely by foreign shareholders, can hire staff, issue invoices, hold a bank account and conduct permitted business activities. It offers control and clarity, at the cost of full compliance obligations and the need for registered capital and a real registered address.

A joint venture (JV) brings in a Chinese partner, usually for sector access, distribution, licensing or local relationships. It can be an equity JV or a contractual arrangement. JVs can open doors, but they also mean shared governance, exit mechanics and dispute resolution that must be negotiated carefully in the articles and shareholders' agreement. Do not treat a JV as a shortcut around restrictions without confirming what is actually permitted.

A representative office (RO) is a non-profit liaison presence. It cannot sign contracts for revenue, invoice customers or employ local staff directly in the way a company can. It suits market research, supplier liaison and coordination, but it is not an operating business.

• WFOE — control, hiring, invoicing, full compliance.
• JV — access and partners, shared control.
• RO — liaison only, no revenue activity.

03 · ChinaMNC

The five-step registration process

While details vary by city, a typical foreign-invested company setup follows five broad steps. Treat this as a map, not a fixed timetable.

• Step 1 — Feasibility and entity design. Confirm the sector is open to foreign investment, choose the city and registered address, define business scope, decide shareholders and legal representative, and settle registered capital and contribution schedule.
• Step 2 — Name and pre-registration. Reserve a company name and prepare the incorporation package, including constitutional documents and investor identification. Some investors need notarised or apostilled documents; check the current local requirement.
• Step 3 — Business licence and filings. Submit to the local market regulation authority. On approval you receive the business licence, then arrange company seals and complete related registrations such as tax, customs where relevant, and foreign exchange.
• Step 4 — Banking and capital. Open the corporate RMB account and the foreign currency capital account, then handle capital contributions in line with foreign exchange rules and the registered capital schedule.
• Step 5 — Operational readiness. Set up accounting and tax filing, payroll and social insurance if hiring, and any sector licences needed before trading. Then start invoicing and reporting on the required cadence.

Each step depends on the previous one, and missing documents are the most common cause of delay. Build a checklist with your local adviser before you start.

04 · ChinaMNC

Documents you will typically need

Document requirements differ by city, sector and shareholder type, but most foreign founders should expect to prepare the following. Confirm the exact list with the local authority or your adviser before submitting.

• Investor documents: certificate of incorporation or equivalent for corporate shareholders, or passport for individuals, often notarised and legalised or apostilled, with Chinese translations where required.
• Constitutional documents: articles of association, and for JVs a shareholders' agreement setting out governance, capital, profit distribution and exit.
• Appointments: legal representative, directors, supervisor and general manager, with identification and consent documents.
• Address evidence: lease or ownership documents for the registered address, plus any filing required by the property or park.
• Name and scope: proposed company name and a business scope drafted in the standard wording used by the local registry.
• Capital and purpose: registered capital amount, contribution schedule and a short description of intended business.
• Authorisations: power of attorney if a representative signs on the investor's behalf.

Translations, notarisation and legalisation are frequent bottlenecks. Start these early, and keep digital and physical copies consistent across every filing.

05 · ChinaMNC

Registered address and business scope

The registered address is a legal requirement, not a formality. It must be a real, documented location acceptable for company registration, and in many cities it must match the property's approved use. Options include a conventional office lease, a serviced office, or an address provided by an incubator or industrial park. Some cities permit virtual or clustered registration in designated areas; others do not. Verify before you sign anything, and ensure the lease is in the company's name or properly assignable.

Business scope defines what the company may do. It is written in standard registry language, and activities outside the scope can create compliance problems, especially for invoicing and licensing. Keep the scope specific to your actual business, include planned adjacent activities where sensible, and remember that certain activities require separate permits before you can trade.

Address and scope also affect banking, tax registration and whether a physical inspection is required. If you plan to hire, check that the address can support employment and social insurance registration. If you plan to import or export, confirm the scope supports the relevant customs and foreign trade registrations. These details are easier to get right at filing than to change afterwards.

06 · ChinaMNC

Banking, tax and visas after registration

Once the licence is issued, the operational work begins. Open the corporate RMB account and the foreign currency capital account at a bank that handles foreign-invested companies, and be prepared for know-your-customer checks on shareholders, beneficial owners and business substance. Capital contributions should follow the registered schedule and foreign exchange rules, with the correct purpose codes and supporting documents.

On tax, register with the tax authority, confirm your taxpayer status, and set up bookkeeping, invoicing and periodic filing. VAT, corporate income tax, withholding on cross-border payments and individual income tax on salaries are the usual areas to plan for. Rules and incentives vary by location and activity, so confirm what applies to you rather than assuming.

On visas and permits, foreign founders and staff generally need a work permit and a residence permit to live and work in China; short-term business visas do not authorise local employment. The process usually involves a permitted entry, a health check where required, and employer-side filings. Plan the sequence with your adviser, because timing affects when you can legally start working on the ground.

07 · ChinaMNC

Common mistakes to avoid

Most problems we see are avoidable with a little patience up front.

• Choosing the entity before the business model. Decide what you will sell, to whom, and how you will invoice before picking WFOE, JV or RO.
• Ignoring the negative list. Assume your sector may be restricted until confirmed; restructuring later is expensive.
• Underestimating document formalities. Notarisation, legalisation, apostilles and translations take time and are easy to get wrong.
• Treating registered capital as a formality. It is a commitment with a contribution schedule and foreign exchange implications.
• Using an address that cannot support the business. Check property use, inspection requirements and employment registration.
• Drafting a vague or overbroad business scope. Both create licensing and invoicing friction.
• Delaying tax and accounting setup. Filing obligations begin early, even before revenue.
• Assuming a business visa permits work. Employment needs the correct permit and residence status.
• Signing a JV without exit terms. Governance, deadlock and exit mechanics belong in the documents from day one.

None of these are unusual; they are simply easier to prevent than to fix.