Form a Company in China — 100% Foreign-Owned WFOE

WFOE, Joint Venture or Representative Office?

Four structures are available to foreign investors:

• WFOE (外商独资企业): 100% foreign-owned limited company with full trading, invoicing and hiring rights; profits repatriable. The legal basis for flagship stores on Tmall, JD.com and Douyin.
• Joint Venture (JV, 合资企业): shared with a Chinese partner. Needed only in sectors still restricted for foreign capital (parts of value-added telecom, media, publishing).
• Representative Office (RO, 代表处): liaison and market research only — cannot sign sales contracts or issue invoices; taxed on a deemed basis. Parent must be 2+ years old.
• Domestic LLC (有限责任公司): requires a Chinese shareholder; foreigners can only join via nominees, a real legal risk. A last resort.

For e-commerce, trading and tech services, the WFOE is almost always the answer.

Registered Capital: Subscribed System and the 2024 Five-Year Rule

Under the subscribed capital system (认缴制) you declare an amount and schedule in the articles — nothing is blocked at a bank on day one, and most sectors have no statutory minimum. The Company Law revision effective 1 July 2024 added one hard rule: subscribed capital must be fully paid within 5 years of establishment. The figure is a signalling device — too low (say ¥10,000) hurts bank onboarding and platform admission; too high creates a real future obligation. For trading and e-commerce WFOEs, ¥500,000-2,000,000 is common.

The SAMR Registration Workflow, Step by Step

1. Name pre-approval: mandatory format "region + trade name + industry + Co., Ltd." (行政区划+字号+行业+有限公司); 1-3 days, prepare 3 candidates.
2. Business scope (经营范围): the registered wording determines whether you may run e-commerce, import/export or value-added telecom.
3. Registered address: a real lease or a compliant zone-provided address; residential addresses generally not accepted.
4. Officers: one legal representative (法定代表人, may be a foreigner) and one supervisor (监事, a different person, foreigner permitted).
5. Articles of association plus apostilled shareholder documents and passport copies.
6. SAMR filing: the license is issued in roughly 1-2 weeks; foreign-investment information goes to MOFCOM in parallel under FIE reporting.
7. Post-license: chops, bank account and tax registration — below.

The Business License and the 18-Digit Unified Social Credit Code

SAMR issues the business license (营业执照) carrying the 18-digit Unified Social Credit Code (USCC) — the company's single legal identity across registration, tax, customs, social insurance and banking. Electronic and paper versions have equal force, and the company legally exists from issuance.

Company Chops: Where the Real Signing Power Lives

In China the chop — not a signature — binds the company. After licensing, the seals are carved and filed with the Public Security Bureau (PSB):

• Company chop (公章): the master seal for contracts and filings — whoever holds it can bind the company.
• Finance chop (财务章): banking documents, payment orders and cheques.
• Legal representative chop (法人章): used alongside the finance chop at the bank.
• Invoice chop (发票章): stamped on fapiao; paper edge cases persist in the e-Fapiao era.

Possession equals signing power — a written chop-control protocol is a governance essential.

Banking: The RMB Basic Account and SAFE Capital Account

Every Chinese company has exactly one RMB basic account (基本户) — authorized for cash operations, tax payments and salaries. Opening takes 1-3 weeks and is the most variable step: banks run their own KYC and usually require the legal representative in person. A foreign-currency capital account with SAFE registration is the channel for injecting capital and repatriating dividends. Bank of China and ICBC are common first choices.

Tax Registration: CIT, VAT and e-Fapiao

Registration is completed on the e-tax bureau under the State Taxation Administration:

• Corporate income tax: 25% standard; qualifying small low-profit enterprises pay as little as 5% effective (taxable profit up to ¥3M); certified High-and-New Technology Enterprises pay 15%.
• VAT: 13% standard on goods, 9% and 6% reduced bands; small-scale taxpayers use a simplified low rate.
• e-Fapiao (数电发票): invoicing is fully digital nationwide, issued and archived through the tax bureau's platform.

Filings are near-universally handled by a bookkeeping agency (代理记账) — budget for it from month one.

Foreign Founder Documents: Apostille Since November 2023

China joined the Hague Apostille Convention in November 2023 — a single apostille now replaces consular legalization for most countries. Needed: certificate of incorporation (corporate shareholder) or passport (individual) with apostille, officer passport copies, certified Chinese translations. Start early — the apostille is the most common bottleneck.

Typical 12-Month Setup Cost

A realistic first-year budget is ¥25,000-60,000 — with no capital blocked, thanks to the subscribed system.

Free Trade Zones and the Hainan Free Trade Port

Location changes both incentives and processing. The Shanghai FTZ offers streamlined foreign-investment procedures; Shenzhen Qianhai targets tech and cross-border services; Hangzhou's e-commerce pilot zone is built for CBEC operators. The Hainan Free Trade Port goes furthest: 15% CIT for encouraged industries plus preferential individual income tax for qualifying talent. Zones also provide compliant registered addresses — no office lease needed on day one.

ICP Filing and License: When Do You Need One?

Any website hosted inside China requires an ICP filing (备案) tied to the domain and hosting. A for-profit internet information service — e.g. a platform hosting third-party sellers — additionally needs a commercial ICP license; notably, the e-commerce class of value-added telecom is open to 100% foreign ownership. Selling through existing platforms (Tmall, JD.com, Douyin) requires no ICP license of your own — the business license suffices.

The No-Company Alternative: Cross-Border E-Commerce (CBEC)

You can test the market without any Chinese entity. Under the CBEC retail import regime, an overseas company joins Tmall Global, JD Worldwide or Kaola directly: goods enter via bonded warehouses or direct mail, taxed under the favorable CBEC composite tax. The limits are real — only "positive list" products, per-order and annual quotas, no domestic general trade or offline channels. The proven playbook: validate demand via CBEC first, then form a WFOE once volume justifies it.

Legal Representative and Supervisor: Choose Carefully

The legal representative (法定代表人) may be a foreigner and needs neither a Chinese visa nor residence — but the role carries personal legal responsibility for company acts, and banks usually want them present at account opening. A supervisor (监事) must also be appointed — a different individual, foreigner permitted. The usual pattern: founder as legal representative, a trusted second person as supervisor, chop custody rules in writing from day one.

2026 Outlook: A 4-8 Week Path to an Operating Chinese Company

The process is now largely digital: SAMR one-stop portals, electronic licenses and nationwide e-Fapiao have removed most historical friction. A realistic calendar: week 1 — name approval and SAMR filing; weeks 2-3 — business license with USCC; weeks 3-4 — chops carved and PSB-filed; weeks 4-8 — RMB basic account, tax registration and e-Fapiao activation. From that point your WFOE invoices, collects RMB via Alipay and WeChat Pay, and anchors flagship stores across China's marketplace ecosystem.