Use it as a national map, then drill into city hubs and verified company-formation counsel for local practice.
1. Main entry vehicles
| Vehicle | Best for | Key limitation |
|---|---|---|
| WFOE | Most operating businesses owned by foreign investor(s) | Scope and licenses must match real activities |
| Equity / cooperative JV | Restricted sectors or partner-driven markets | Governance and exit deadlock risk |
| Representative office | Liaison, research, limited non-profit activities | Cannot ordinarily invoice customers or hire local staff directly |
| Partnership / special vehicles | Certain funds and sector structures | Distinct registration and investor eligibility rules |
Using a representative office to run a full sales operation - invoicing, hiring, and contracts - is one of the most common foreign-investor mistakes and can force a painful restructuring later.
2. Foreign investment access
Check the foreign investment negative list and any free-trade zone special lists. Encouraged industries may access incentives; prohibited or restricted sectors need restructuring or Chinese control. National security and merger-control reviews can apply to acquisitions.
Business scope drafting is not cosmetic: it drives licensing, banking questions, and whether you can lawfully launch a new product line without amendment.
3. Incorporation roadmap (typical WFOE)
- Name reservation and business scope drafting (scope affects licensing).
- Investor KYC documents (notarization/legalization or apostille as required).
- Articles of association; legal representative, directors/supervisor, registered address.
- Registration with market regulation authorities; obtain business license.
- Company seals (company, financial, invoice/contract as applicable).
- Tax registration, social insurance registration, bank accounts (RMB basic account; foreign exchange capital account processes).
- Industry licenses (ICP, food, medical, education, payment, etc.) if required before trading.
4. Capital, governance, and chops
Registered capital is generally subscription-based under company law reforms, but banks, counterparties, and licensed sectors may still expect credible capitalization. Governance documents should clarify legal representative authority - the person who can bind the company in many third-party contexts.
Treat chop control as internal control design: who holds seals, dual approval for payments, and specimen management. Lost chops require public notice and re-carving procedures - plan custody before day one.
5. Hiring and premises
Operating companies hire under labor law (see the employment guide). Leases for registered address must satisfy local requirements; virtual addresses face increasing scrutiny in some cities. FTZ locations can change practical licensing and foreign exchange workflows.
Foreign staff need aligned work and residence authorization - see the visa & immigration guide.
6. Post-incorporation compliance
- Accounting books in compliance with PRC standards; annual reporting.
- Corporate income tax, VAT, individual income tax withholding.
- Beneficial ownership and ultimate controller filings where required.
- Data, cybersecurity, and sector reviews for digital businesses.
7. Changing or exiting the structure
Equity transfers, capital increases, relocations, and liquidations each have tax and deregistration sequences (tax clearance is often the long pole). Plan exit clauses in JV contracts early - deadlock, put/call, and non-compete.
If a commercial relationship sours, dispute-clause design matters: see the dispute resolution guide.
8. Common mistakes
- Using an RO to run a full sales operation.
- Copying a US/EU certificate pack without China-specific articles of association.
- Ignoring business scope when launching new product lines.
- Underestimating time for investor document legalization and bank account opening.
- Leaving legal representative and chop authority undefined between HQ and local management.
- Skipping sector licenses until after sales have already started.
