Starting a business in China: A guide for Indian residents with requirements, fees, and opening a China business account

China is the manufacturing hub of the world and a global powerhouse, with one of the world’s largest GDPs. China has the advantage of being close to emerging economies like India and Indonesia. With a large population and access to resources, China can be an interesting destination for many entrepreneurs and businesses.

However, starting a company in China can have its challenges. Read on to learn more about what it takes to start a business in China and the requirements that would need to be met by a foreign national.

Table of contents
Can you register a company in China from India? Different types of companies in China Requirements to start a Chinese company from India What does it cost to run a Chinese company Starting costs for setting up the company Fees for compliances, annual filings Taxes and Government Fees Starting a business account for China company Moving to China from India Startup / Entrepreneur Visa Program

Can you register a company in China from India?

Yes. Indian business entities can register a company in China. However, the registration process is complicated. Entrepreneurs may find it challenging to interpret company laws and prepare the necessary documents. Professional agencies are available to help Indian business enterprises register their companies in China. A main benefit of hiring an agency, even if it adds to your costs, is the availability of expert professional advice from people who know the intricacies involved in operating a business in China.

In addition to choosing an agency, selecting the appropriate business structure for company registration in China is key. Check out our next section on the different types of companies in China¹

Different types of companies in China

Businesses have to adapt to the ever-changing business environment when operating in China. The government plays a larger role in the market when compared with other countries, and this extends to what businesses can open. China has imposed restrictions on foreign investments in several business and services sectors. Therefore, choosing the right business structure becomes essential. Usually, China allows the registration of the following business structures.²

• Wholly Foreign Owned Enterprise - WFOE is the most preferred business entity by investors because it is a legal entity with 100% foreign ownership and limited liability. Foreign companies can conduct business with local Chinese companies, partners, and customers. Please note that the WFOE concept has been replaced by Foreign-Invested Enterprise (FIE) for new companies. It covers partially and wholly-foreign-owned companies in China.
• China Equity Venture Company - Also known as Equity Joint Venture Company, this business structure has foreign investors and compulsorily a Chinese shareholder with a specific percentage of equity in the company.
• China Free Zone Company - Many investors prefer this business structure because of the concessions available to businesses in SEZs. Usually, export-oriented companies register their businesses as a China Free Zone Company.
• Offshore Company - As the name suggests, an offshore company is registered outside Chinese shores. In this case, a Chinese offshore company is registered in Hong Kong SAR. The advantage is the different tax structure of Hong Kong from that of China.
• Branch / Representative Office - Companies registered outside China cannot open branch offices in China. A WFOE or a China Equity Venture Company can establish a branch office in China. However, foreign companies can open representative offices with prior approval from SAMR (State Administration for Market Regulation)

There may be additional business structures to consider and their availability may depend on your industry, regional province and size.

Requirements to start a Chinese company from India

As mentioned earlier, registering a company in China is tricky. Therefore, companies must ensure fulfilling the following eligibility criteria.

• A company must have a minimum of 3 to 13 directors. In addition, it must have one chairman and a deputy chairman.
• The company must have a registered address for operating in China.
• It should appoint a legal representative in China to fulfill the company registration procedures.
• The company must reserve its name.

Here is the procedure for registering a company in China.³

• Registering the China Business Name - The first thing a company must do is to register its business name in China. Since there cannot be overlapping or duplicated names, companies must seek approval from AIC (Administration of Industry and Commerce) or SAMR. This process takes around two weeks. The company must finalize its registered office.
• Legal Compliance - Companies should comply with various legal formalities after registering their business name.

1. They must get their lease deed approved by a local government authority.
2. While China does not stipulate minimum paid-up capital requirements, companies must at least have a paid-up capital of USD 20,000. This figure can vary from one business sector to the other.
3. The Public Accountant must certify that the company’s capital satisfies the requirements of the Companies Law of PRC.
4. Companies must appoint one shareholder, a director, a legal representative, and the Board of Supervisors.
5. WFOEs must ensure their foreign investor is registered through the Ministry of Commerce website.

• Certificate of Approval - Companies must obtain the Certificate of Approval from the Ministry of Commerce by submitting the prescribed documents.
• Obtain business licenses - China has introduced the 5-in-1 filing system where the applicant company can obtain multiple business licenses simultaneously. They include Business License, Organization Code, Tax Registration Certificate, Social Security Registration Certificate, and Statistical Registration Certificate.
• Create an official company stamp - The company must create an official stamp for all documentation.
• Open a corporate bank account - Finally, a company must open a corporate bank account to run its business operations.

A company must submit specific documents applicable to its business structure while registering in China. They comprise the following.

• Approved business name and registered address
• The ID of the company supervisor and the legal representative
• Information regarding the shareholders and directors
• Notary documents of shareholders
• AoA and MoA
• Registered Capital structure
• Feasibility Study
• Managerial structure and the list of controlling partners

What does it cost to run a Chinese company

The cost to run a company in China is going to depend on a number of factors. Two main factors are what industry the company is in, and where it is located. A manufacturing company will have inputs, suppliers and raw material expenses while an internet-based company will operate digitally. Companies established in rural or tier three or four cities will also be cheaper to operate than those in Beijing or Shanghai.

If you are registering a WFOE, it is likely you will also need to produce paid-up capital for the business.

Hiring employees, vendors and suppliers need to be accounted for in your expenses. They each can have different costs which can vary depending on your business needs. And if you are exporting your product, identify how much the local, regional and national charges are and the transport costs.

Starting costs for setting up the company

Besides the initial paid-up capital, businesses can incur substantial costs with consulting agencies, purchasing company seals, acquiring certificates, notarizing documents, and filing registration. The costs vary from one service provider to the other. Keep clear documentation and a paper trail for the costs for proper accounting.

Fees for compliances, annual filings

Companies registered in China must comply with the renewal of licenses and lease deeds. Tax and other annual filing expenses can be substantial. A local accountant can help navigate the annual filing process and keep you and your company in compliance with local and regional laws.

Taxes and Government Fees

Taxes and government fees can vary in China depending on the type of business. It is important to stay on top of your taxes in China and make the payments in time to avoid penalties and fees. A qualified tax accountant can play a large role in managing your business taxes.

Your province and municipality in China can determine your taxes, in addition to the main corporate taxes you have to pay. Here are is a general overview of some of the taxes, but keep in mind these can change year to year, and be different for you and your unique business:

1. Corporate Income Tax is charged at 25% of the company’s profits. However, concessions are available in certain sectors that are encouraged to develop.
2. Companies incur a transaction or turnover tax between 3% and 5% of their total sales.
3. Customs duties are applicable according to the company’s products.
4. Currently, the VAT in China is charged in multiple slabs of 3%, 6%, 9%, and 13%.⁴

Starting a business account for China company

It is necessary to open a business banking account for a company registered in China. It can help you pay your local suppliers, employees or vendors, and it is how you can make tax payments. A business bank account will also help you receive payments locally.

Many international banks like Citibank and Standard Chartered Bank have branch offices in China. HSBC, a familiar bank in India, also operates as HSBC China across 50 different cities in the country. Alternatively, you can open a local bank account and transfer the funds to your Chinese branch. Chinese banks like ICBC and Hang Seng Bank offer convenient facilities to open business accounts. However, you must have your documents ready.

Want to learn more about opening a business bank account in China? Read more in our full guide to opening a business bank account in China.

Challenges in opening and managing account from India

One of the biggest challenges of running a business across countries is making international money transfers. This could be to make payments to employees, fund the business or for receiving payments. Banks can be an expensive way to transfer money internationally. Most banks complete transfers by wire transfers which can take up to 5 days. They also typically charge a transfer fee for processing the transfer, and an exchange rate fee. The exchange rate fee is a hidden fee in the exchange rate you get which takes a cut from every rupee, dollar or euro you convert. It can seem small, but the exchange rate fee can make your transfer more expensive. Compare your exchange rate with the mid-market exchange rate you see on Google for the same currencies to see the fee you are being charged.

Want to make transfers with no hidden fees and with the mid-market exchange rate? Check out Wise.

Make international transfers easy with Wise

Used by over 300,000 businesses globally, Wise Business Account makes international transfers for businesses smooth, easy and hassle-free.

Our online process lets you open and verify your China business account from anywhere. With our customer support available in English and our commitment to providing a seamless digital experience, Wise offers an ideal alternative to traditional banks for your business abroad.

Business categories supported on Wise 👉

Moving to China from India

Indian entrepreneurs intending to visit China and open companies must apply for the Chinese Business Visa (M Visa) in advance. This visa is issued for multiple validity periods ranging from 30 days to up to 10 years.

Indian passport holders can also apply for a D Visa that allows permanent residency in China. They can access the official website and apply for the visa online. Subsequently, a visit to the Chinese Visa Application Service Center is required to complete the biometric formalities.⁵

Visa and residency rules can change so keep updated on immigration policies and rules.

Startup / Entrepreneur Visa Program

China does not offer any unique startup/entrepreneur visa programs for Indian nationals to set up business entities in China.

🔎 Need to send money home from China? Expats in China, welcome to Wise!

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This article is not intended to provide financial, legal, immigration or business advice. Consult professionals for personalized advice that is apt for you and your business.

Sources used for this article:

1. Can you register a company in China from India
2. Different types of business structures in China
3. Setting up a company in China
4. Tax rates and other fees
5. Visa for China

Sources verified on 1 December 2023.

Cover photo by Alexander Ramsey on Unsplash.