If you are a foreign entrepreneur or investor who wants to start a business in China you may wonder how much it costs to register a company in China. The answer is not simple, as there are different types of business entities, legal procedures, and fees involved in the process. In this blog post, we will explain the main options for setting up a company in China as a foreigner, and the estimated costs for each option.
**Wholly Foreign-Owned Enterprise (WFOE)**
A WFOE is a limited liability company that is fully owned and controlled by foreign investors. It can engage in various business activities, such as manufacturing, trading, consulting, or service provision, depending on its business scope and license. A WFOE can hire local and foreign employees, issue invoices, and receive payments in China.
The cost of registering a WFOE in China varies depending on the location, industry, and registered capital of the company. The registered capital is the amount of money that the shareholders commit to invest in the company over a certain period of time. It is not required to be paid up front, but it may affect the minimum office space, tax rate, and annual audit requirements of the company.
According to Vakil Search, a WFOE's registered capital ranges from 100,000 to 500,000 CNY (about 15,500 to 77,500 USD). Other costs involved in the incorporation process include:
- Company name registration: 100 CNY (15 USD)
- Business license application: 50 CNY (8 USD)
- Company seal purchase: 500 CNY (77 USD)
- Certificate acquisition: 300 CNY (46 USD)
- Bank account opening: 1,000 CNY (155 USD)
- Notary fees: 2,000 to 10,000 CNY (310 to 1,550 USD), depending on the documents required
- Legal fees: 10,000 to 30,000 CNY (1,550 to 4,650 USD), depending on the complexity of the case
The total cost of registering a WFOE in China can range from 14,000 to 42,000 CNY (2,170 to 6,510 USD), excluding the registered capital.
**Joint Venture (JV)**
A JV is a partnership between a foreign and a Chinese company. It can be either an equity JV or a cooperative JV, depending on the ownership structure and profit distribution. A JV can benefit from the local partner's market knowledge, contacts, and resources, as well as share the risks and liabilities.
The cost of registering a JV in China is similar to that of a WFOE, except that it may involve additional fees for negotiating and drafting the joint venture contract and articles of association. The registered capital of a JV depends on the industry and the proportion of foreign investment. Some industries require a minimum foreign investment of 25% or more.
According to SMEsChina, the cost of registering a JV in China can range from 5,000 to 10,000 USD, excluding the registered capital.
A sales office is an option for foreign companies that want to have a local presence in China without setting up a separate legal entity. A sales office can rent an office space, hire employees, receive payments from customers, and pay suppliers through an umbrella company or an employer of record (EOR) that handles the legal and payroll aspects of the business.
The cost of setting up a sales office in China depends on the fees charged by the umbrella company or EOR. According to Sapore di Cina, an umbrella company can charge between 3% and 10% of the employee's salary as a service fee. Additionally, there may be costs for renting an office space or a warehouse.
The total cost of setting up a sales office in China can vary widely depending on the size and scope of the business.
**Representative Office (RO)**
An RO is a liaison office that represents a foreign company in China for non-profit purposes. An RO can conduct market research, promotion, quality control, or business meetings, but it cannot engage in direct sales or sign contracts. An RO can hire local staff through an agency or an EOR.
The cost of registering an RO in China includes:
- Registration fee: 3,000 CNY (465 USD)
- Annual fee: 2,000 CNY (310 USD)
- Agency or EOR fee: varies depending on the number and salary of employees
- Office rental fee: varies depending on the location and size
The total cost of registering an RO in China can range from 5,000 to 20,000 USD per year.
As you can see, there is no one-size-fits-all answer to the question of how much it costs to register a company in China The cost depends on the type of business entity, the location, the industry, the registered capital, and other factors. Therefore, it is advisable to consult with a professional agency that can help you choose the best option for your business and guide you through the registration process.