Published by ChinaMNC · Daan

China Marks 90th Anniversary of Long March: What Foreign Founders Need to Know

A government ceremony in Beijing commemorated the 90th anniversary of the Long March. For international entrepreneurs, the event underscores China's political stability, but company registration requirements remain unchanged. Here's what you need to know.

What This Means for Your China Company Registration

On October 22, a ceremony marking the 90th anniversary of the Chinese Red Army's Long March was held at the Great Hall of the People in Beijing. President Xi Jinping delivered an important speech, and other senior leaders attended. While the event itself is political in nature, it serves as a reminder of China's stable governance environment—a factor that foreign founders should consider when planning to register a company in China. However, the ceremony does not introduce any new policies affecting business registration. The core requirements for setting up a foreign-invested enterprise (FIE) remain as follows.

Entity Choice: Which Structure Fits Your Business?

Foreign investors typically choose among three main entity types: the wholly foreign-owned enterprise (WFOE), the Sino-foreign equity joint venture (EJV), and the representative office (RO). Each has distinct implications for liability, capital, and operational scope. The WFOE is the most common choice for foreign founders seeking full control. The EJV requires a Chinese partner, which can be beneficial for market access but involves shared decision-making. The RO is limited to liaison activities and cannot engage in profit-making activities. Choosing the right entity is the first step and depends on your business objectives, industry, and long-term strategy.

Registration Steps and Documents

Registering a company in China involves several key steps: name pre-approval, submission of articles of association, capital verification (for certain industries), and obtaining a business license. Required documents generally include the foreign investor's legalized and notarized certificate of incorporation (or passport for individuals), proof of address for the registered office, and a feasibility study report (for certain sectors). The process is administered by the State Administration for Market Regulation (SAMR) and its local branches. While the procedure has been streamlined in recent years, attention to detail is crucial to avoid delays.

Capital Requirements and Foreign Exchange

China has moved from a paid-in capital system to a subscribed capital system for most companies, meaning shareholders can commit to contributing capital within a specified period as stated in the articles of association. However, foreign investment still requires registration with the Ministry of Commerce (MOFCOM) or its local counterparts, and foreign exchange controls apply. Foreign founders must ensure that capital contributions are made through proper banking channels and are registered with the State Administration of Foreign Exchange (SAFE). Failure to comply can lead to penalties and difficulties in repatriating profits.

Licenses and Permits

Depending on the industry, additional licenses may be required. For example, companies in food and beverage, education, or healthcare need specific permits from the relevant regulatory bodies. The Negative List for Foreign Investment specifies sectors where foreign investment is restricted or prohibited. Outside the Negative List, foreign investors enjoy national treatment. It is essential to check the latest Negative List (updated periodically) to confirm whether your business scope requires special approval. For most manufacturing and service sectors, foreign ownership is permitted, but some sectors like media and telecommunications have restrictions.

Tax Obligations and Compliance

Once registered, companies must comply with China's tax regulations. The main taxes include corporate income tax (CIT) at 25% for most enterprises, though preferential rates exist for qualified small and micro enterprises and high-tech companies. Value-added tax (VAT) applies to goods and services, with rates varying from 6% to 13%. Foreign companies must also register with local tax authorities and file monthly or quarterly returns. Additionally, annual reporting and audit requirements apply. Understanding these obligations from the outset helps avoid penalties and ensures smooth operations.

Ongoing Compliance and Annual Reporting

After registration, companies must file annual reports with SAMR and complete foreign investment statistical reporting. Changes to registered capital, business scope, or legal representative must be reported in a timely manner. The "multi-report integration" reform has simplified some procedures, but compliance remains a key focus for authorities. Foreign founders should establish robust internal controls and consider engaging local professionals to manage these tasks.

Conclusion

The commemorative event highlights China's political continuity, which is generally positive for long-term business planning. However, foreign founders should focus on the practical aspects of company registration: selecting the right entity, preparing documents, meeting capital requirements, obtaining licenses, and maintaining tax compliance. Staying informed about regulatory changes is essential, as China continues to refine its foreign investment framework.

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.

For assistance with registering and operating a company in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.