Doing Business Project publishes research driven findings about regulations and reforms on economies across the globe. One of its findings is about “Starting a Business in China” and lists the following bureaucratic and legal hurdles faced by companies looking to register a business in China. This list is applicable regardless if you decide to do a join venture or go solo. Items in the list below are not always dependent on each other. For example, numbers 9 and 13 can occur simultaneously with another procedure.
Article 26 lowers the minimum capital requirement to CNY 30,000. According to this article, the shareholders, after paying the required initial capital contribution, may pay off their remaining capital contributions, if any, within 2 years after establishing the company. Note that the required initial capital contribution is at least 20% of the proposed company’s registered capital and shall not be lower than the legal requirement for the registered capital for particular industries.Article 27 provides the form of the capital contribution. According to this article, if the initial capital contribution is in cash, the shareholders must (a) open a preliminary bank account after obtaining preapproval of the company name; and (b) deposit the initial capital contribution into the bank account. If the initial capital contribution is in nonmonetary assets, the shareholder must transfer the property title of the assets to the company and the value of such assets must be appraised. The initial capital contribution must be verified by legally established verification institutes.
An auditing firm has to prepare a report that verifies the company capital as part of the documents necessary for registration.4. Apply for registration certification “business license of enterprise legal person”
Since July 2010, it has been possible to use the “parallel application and review” process in most districts of Shanghai. The entrepreneur can submit the documents for business license, certificate for quality and technology and state and local tax at the same time at one window. All the application forms can be downloaded from SAIC’s website. The agent at the window will scan all the documents and send them electronically to all relevant agencies. The business license is approved first and the two other agencies can give their approval immediately after. They are notified online once the business license has been approved.
If all the shareholders are individual investors, the registration file will include the duplicate of the business license (the original and one copy) and the legal representative’s identification card. If registration is approved, a notice to make the company seal will be issued to the company.DID YOU KNOW?
“It takes about 158 days in China to officially start a business.”
To make the company seal, the company shall designate a company possessing a Shanghai Special Industry Permit (company seal carving) (《上海市特种行业许可证》公章刻制业). This process costs CNY 70–300, depending on the design and the quality.7. Pay the fee for the organization code certificate issued by the Quality and Technology Supervision Bureau at the time of pick-up
Prior to pick up the organization code certificate issued by the Quality and Technology Supervision Bureau and pay the fees, the entrepreneur had to obtain the company seal.8. Register with the local statistics bureau
Within 30 days of obtaining the business license, the company must apply for statistics registration by submitting to the local statistics bureau a completed statistics registration form along with the following documents:
• Business license (one copy)
• Organization code certificate (one copy)9. Open a formal bank account of the company and transfer the registered capital to the account
The procedures and required documents for opening a company bank account and transferring the registered capital to it may vary depending on each bank’s practice.10. Apply for the authorization to print or purchase financial invoices/receipts
After registering for state or local taxes and obtaining the tax registration certificate, the company must apply separately to the relevant authorities (that is, the state and local taxation offices) for approval to purchase and issue financial invoices/receipts. The taxation authority will issue the invoice purchasing book, if it agrees to grant the company such qualification, upon reviewing the following submitted documents:
• Tax registration certificate (one copy)
• Identity card of taxation personnel (one copy)
• Application forms
• Models of invoice seal
DID YOU KNOW?
“It takes about 119 days in China to get electricity.”
11. Purchase uniform invoices
The company must obtain and submit an application form to purchase uniform invoices (购用统一发票申请单). The form and the authorization book (from Procedure 10) must be submitted to the Tax Office.
The VAT and ordinary invoices are published by the tax authority for anti-forgery reasons (with few exceptions). Taxpayers buy VAT and ordinary invoices from the tax authority.
The Notice on the Exemption of Some Administrative Fees for Small and Micro Enterprises (CZ  No.104), co-issued by the Ministry of Finance and the National Development and Reform Commission, exempts micro and small size companies from paying several administrative fees between January 1, 2012 and December 31, 2014.
12. File for recruitment registration with local career service center
Within 30 days of recruiting employees, a new company must register with the local career service center, sponsored by the local government. Relevant application forms which can be electronically downloaded or obtained from the local career service center shall be filled and submitted.
13. Register with Social Welfare Insurance Center
Within 30 days of establishment, the company must register for the payment of employee social insurance with the local social insurance office by submitting a completed social insurance registration form and the following documents:
• Company seal
• Duplicate of business license (original and one copy)
• Organization code certificate (original and one copy)
After all these documents have been verified, the authorities will issue a notice to open a social insurance account for the company. The company must then apply to open a special account at the designated bank. The local social insurance office will issue the social insurance registration card to the company on receiving bank notification of account opening.