Doing Business in China: A Practical Starting Guide

Foreign investment includes direct or indirect investment in China by foreign natural persons, enterprises or other organisations, including establishing a foreign-invested enterprise, acquiring equity, investing in a new project and other prescribed forms. A foreign-invested enterprise is an enterprise wholly or partly invested by a foreign investor and registered in China under Chinese law.

The Foreign Investment Law applies pre-establishment national treatment together with the negative-list system. An FIE’s organisational form, structure and activities follow the Company Law, Partnership Enterprise Law and other applicable laws.

This makes “Can a foreigner start a company?” too broad to answer usefully. The practical question is whether the specific investor, activity, structure and location fit the current access and licensing rules. Fields outside the negative list are administered under equal-treatment principles for domestic and foreign investment; a listed or licensed activity needs the route that applies to it.

The legal entity is more than the name on a proposal. It is the party that signs contracts, holds registrations, employs people, receives or makes payments and maintains the operating records. A group brand, overseas parent, Chinese entity and local employing entity may be connected, but they are not interchangeable.

A company is established upon registration with the company registration authority and issuance of a business licence. The date of issuance of the business licence is the date of establishment.

The licence states the company’s business scope. The scope must comply with applicable market-access and foreign-investment access measures, and a pre-registration licensed item needs its required approval. Registration therefore gives the company a legal starting point; it does not by itself settle every sector, employment, tax, banking or day-to-day operating question.

Registered capital is a real company decision

For a limited liability company, registered capital is the total amount of capital contributions subscribed by all shareholders. Under the current Company Law rule, shareholders must fully pay the subscribed capital within five years from company establishment according to the articles of association.

Capital can be contributed in currency or in non-monetary property that can be valued in currency and legally transferred, including physical assets, intellectual property, land-use rights, equity and claims. If the company cannot pay due debts, the company or its creditors may request shareholders whose contribution period has not expired to contribute early.

Build an opening sequence around dependencies

Start with decisions that are difficult to reverse: activity and market-access position, contracting and employing entity, operating city, address and people who must be in place. Then connect registration, premises, employment, payment, bookkeeping and reporting.

A lease should not outrun an unresolved address or activity requirement. A hire should not outrun the employer and work-authorisation route. A customer contract should not assume an entity, licence or payment pathway that is not ready.

The legal representative must be a director or manager who carries out the company’s affairs on its behalf. Directors, supervisors and senior managers must comply with laws, administrative regulations and the articles of association, and bear duties of loyalty and diligence to the company.

Those are not just registration-form labels. Record who can bind the company, who approves contracts and payments, who owns company seals and credentials, who maintains statutory and accounting records, and who receives authority, bank and employee communications.

Initial and change foreign-investment information reports use the enterprise registration system, while annual reports use the National Enterprise Credit Information Publicity System. Companies, partnership enterprises and branches of foreign companies also file beneficial-ownership information through the relevant registration system.

Before comparing benefits or moving dates, define the employment relationship. Write down the legal name of the employing entity; the role and main duties; the city and actual work location; the expected start date; who will sponsor and file any work-authorisation process; whether the role involves other locations, clients or frequent travel; and whether the arrangement is employment, assignment, secondment or something less clear.

The employer is not just the company brand on an offer letter. The legal entity that employs the person, the job performed and the location covered by any work authorisation must fit the route that the responsible authority accepts.

For foreign employees, entry permission, work authorisation and residence status are separate systems. A visa label by itself is not a complete employment route. The employer should identify which filing it owns, the current status and the evidence produced at each step. The employee should keep copies of the records that affect their status.

A written labour contract must contain the employer and employee identifying details, contract term, work content and place, working time and rest or leave, remuneration, social insurance, labour protection and conditions, occupational-hazard protection, and other legally required matters.

Read the offer as one system

Do not convert employer promises into benefits until they are written clearly enough to enforce or verify. A housing allowance that requires the employee to pay first is different from employer-paid housing. A “bonus” with undefined conditions is different from fixed salary. “Visa support” can mean anything from providing an HR letter to managing the employer-side filing.

Payroll deductions can include more than individual income tax. The employer is generally a withholding agent for employment income it pays, but payroll withholding is not a guarantee that every cross-border or year-end tax question has been resolved.

Social insurance is another system. Current official guidance states that qualifying foreign employees working in China participate under the national social-insurance framework, with local administration and bilateral social-security agreements potentially affecting specific coverage.

Keep separate records for gross pay; tax withheld; social-insurance deductions; employer contributions if shown; reimbursements; and benefits paid outside payroll. If HR cannot explain a deduction, ask for the payroll basis and the official or local policy route it is using.

Company setup is one part of the operating system. The company still needs books and records that connect contracts, invoices, payments, payroll, tax filings, expenses and assets to the correct entity and period.

Do not choose an arbitrary universal retention period for every document. Identify the record category, the rule that applies to it, the person responsible for keeping it, and the point from which the retention period runs. Keep current-year records accessible to the people operating the business without losing the controlled archive.

Business banking and payments start with a defined purpose: who pays, who receives, what contract or invoice supports it, which entity owns the account and what evidence the institution requests. A bank must answer the specific account and transaction question. There is no universal document list, account outcome, card or app guarantee, or fixed processing time.

For each material transaction, keep the contract or order, invoice where applicable, approval, payment evidence, delivery or completion evidence, accounting entry and any tax treatment that needs to be explained. Reimbursements should show the business purpose, claimant, approver, supporting evidence and payment.

• Keep current contracts and business scope beside the activity they support.
• Maintain accounting, invoice, payment and reimbursement records that can be traced to the entity and transaction.
• Keep payroll, tax and social-insurance records retrievable by period and employee.
• Keep filing receipts and accepted results, not only messages saying a task was handled.
• Record licence, contract, employment and payment-route changes before they become urgent.

Revisit the operating model when the activity, ownership, contracting entity, business scope, office, worksite, employer, role, payment route or city changes. The old answer may still be useful, but it should not be assumed to carry across automatically.

Use three states for each workstream: complete with evidence; pending with an owner and next action; or disputed or unclear. A task is not complete because a message says it was handled. Keep the licence, filing result, signed agreement, payroll record, bank confirmation or authority response that actually closes it.

For ongoing operations, keep a control table with the obligation, owner, evidence, due date and escalation route. Cover corporate records, contracts, licences or permissions, payroll, tax and bookkeeping, social insurance, major payments and employment changes.

Know where local implementation begins

The national legal framework does not make every local service channel identical. Company establishment, work-authorisation steps, premises questions and government-service routes need the current channel for the actual city and case. A process published for one district or special area should not be treated as the citywide procedure.

Use official channels for regulated questions first. Professional support becomes useful when the issue is defined—for example, an activity and business-scope question, a proposed entity structure, a nonstandard employment arrangement, a contract term, a payroll or tax record, a payment route or a local operating requirement—rather than as a substitute for identifying the responsible authority.