Last reviewed October 7, 2026 · By the NYBACS advisory team
Short answer
Foreign investors usually enter China through a wholly foreign-owned enterprise (WFOE), a limited liability company registered with the local Administration for Market Regulation (AMR) under the Foreign Investment Law and the Company Law. Most sectors are open to 100% foreign ownership unless listed in the national Negative List. Since July 2024, subscribed capital must generally be paid within five years, and the company needs its chops, bank accounts and tax registration before it can trade.
Key takeaways
- Under the Foreign Investment Law in force since 2020, foreign-invested enterprises are set up under the same Company Law as domestic companies, with restrictions only for sectors on the Negative List.
- The 2024 Negative List, effective 1 November 2024, cut restricted items to 29 and removed all remaining restrictions in manufacturing.
- The revised Company Law, effective 1 July 2024, requires subscribed capital of a limited liability company to be fully paid within five years of incorporation.
- China joined the Apostille Convention with effect from 7 November 2023, so most foreign corporate documents are now apostilled instead of consular-legalised.
- Every foreign-invested company files an annual report through the national enterprise credit information system between 1 January and 30 June.
China at a glance
| Common entity for foreign owners | Wholly foreign-owned enterprise (foreign-invested LLC); joint venture; representative office for non-trading presence |
|---|---|
| Company registry | Local Administration for Market Regulation (AMR), under SAMR |
| Foreign ownership | Up to 100% outside the Negative List (2024 edition: 29 items, no manufacturing restrictions); caps or prohibitions for listed sectors |
| Local director / resident requirement | No nationality rule for directors; the legal representative is often expected to attend banking and regulatory steps in person |
| Registered office | Registered address in China, generally a real commercial lease |
| Key tax registrations | Tax registration with the State Taxation Administration; CIT (25% standard), VAT, fapiao e-invoicing; social insurance and housing fund |
| Recurring compliance | VAT/CIT filings, annual CIT settlement by 31 May, annual report by 30 June, audits commonly expected, five-year capital payment |
| Typical setup timeline (indicative) | About one to three months to an operating bank account for straightforward cases |
Indicative only. Rules, filings, fees, ownership restrictions and timelines vary and change — confirm the current position before acting.
WFOE, joint venture or representative office?
| Option | Can it trade? | Best for |
|---|---|---|
| WFOE (foreign-invested LLC) | Yes, within its approved business scope | Full control over operations, IP and profits |
| Joint venture with a Chinese partner | Yes | Sectors with ownership caps, or where a partner brings licences, customers or land |
| Representative office (RO) | No; liaison and market research only | Testing the market before committing capital |
The WFOE is the default for most foreign SMEs in consulting, trading, technology and manufacturing. Joint ventures are needed only where the Negative List caps foreign equity or when the partner contributes something essential. Representative offices cannot sign sales contracts or issue invoices and are taxed on a deemed basis, so they suit only a short-term presence.
Step-by-step: setting up a WFOE
- Check the Negative List and business scope. Choose business-scope terms from the standard catalogue and confirm none are prohibited or restricted for foreign investors. Some activities also need sector permits.
- Secure a registered address. Most cities require a real commercial lease; some free trade zones and districts offer more flexible addresses.
- Name pre-check and online application to the local AMR, with articles of association, officer appointments and investor documents.
- Business licence issued by the AMR. The initial foreign investment information report to the commerce authorities is generally submitted through the same registration system.
- Engrave and file the company chops — company, finance, legal representative and invoice chops — with the public security bureau.
- Open bank accounts: a basic RMB account and a foreign currency capital account. Foreign exchange registration for direct investment is handled through the bank.
- Tax registration and invoicing: confirm tax type, set up fully digitalised e-invoices (fapiao) and register for social insurance and housing fund.
- Inject capital according to the articles and within the five-year limit.
Indicatively, a straightforward WFOE takes about one to three months from complete documents to an operating bank account; permits, sector approvals or address issues add time.
Officers, documents and authentication
A WFOE needs a legal representative (the chairman, executive director or general manager), a director or board, and a general manager. A supervisor is traditionally required, although under the 2024 Company Law small companies can dispense with one with unanimous shareholder consent, or use an audit committee. The legal representative carries personal regulatory exposure and is often asked to attend the bank.
Corporate investors provide a certificate of incorporation or good standing, a board resolution, and identification for appointed officers. Individuals provide passports and proof of address. Since November 2023, documents from Convention countries are notarised and apostilled; Chinese translations are required.
Tax, invoicing and capital rules
The standard corporate income tax rate is 25%, with reduced effective rates for qualifying small low-profit enterprises and high-technology enterprises. VAT applies at different rates for goods and services, now under the VAT Law effective 1 January 2026. Revenue is evidenced through fapiao issued in the national e-invoicing system, so invoicing set-up is part of going live.
The five-year capital rule changes how foreign investors plan registered capital: set an amount you can actually fund within five years. Profit repatriation generally requires the annual audit, CIT settlement and statutory reserves, plus withholding tax on dividends, subject to treaty relief.
Banking and KYC in China
Chinese banks verify the legal representative in person in most cases, review the business licence, articles, lease and beneficial owners, and may visit the office. Capital accounts receive foreign currency injections, and every payment out of China must be supported by contracts, fapiao and tax filings. Timelines and requirements vary by bank and city, so plan the legal representative's availability and cross-border fund flows before incorporation.
Ongoing compliance and whether China is the right destination
Recurring obligations include monthly or quarterly VAT and CIT prepayments, the annual CIT settlement by 31 May, the annual report through the national enterprise credit information publicity system between 1 January and 30 June, statutory audits commonly expected for foreign-invested enterprises, social insurance and individual income tax withholding, and keeping the beneficial-owner and business-scope records current.
China remains essential for businesses that sell to Chinese customers or need its manufacturing ecosystem. Many investors hold the WFOE through a Hong Kong company for treaty access and regional management, and compare Vietnam when diversifying manufacturing.
Common mistakes to avoid
- Choosing a business scope that does not match the real activities, which later prevents issuing the right fapiao or obtaining permits.
- Registering inflated capital that cannot be paid within the five-year limit.
- Using a representative office to sign sales contracts or collect revenue.
- Appointing a legal representative who cannot travel to China for bank verification.
- Assuming every activity is open because manufacturing restrictions were removed from the Negative List.
- Planning to repatriate profits before the annual audit and CIT settlement are done.
Documents and records to prepare
- Parent certificate of incorporation or good standing, notarised and apostilled
- Parent board resolution approving the WFOE and appointing officers
- Passports of the legal representative, directors, supervisor and general manager
- Articles of association of the WFOE
- Lease and property certificate for the registered address
- Beneficial-owner information
- Chinese translations
NYBACS 360° support
How NYBACS helps
- Checks your business scope against the Negative List and sector permit rules.
- Plans registered capital and contribution timing under the 2024 Company Law.
- Coordinates our Chinese partner on AMR registration, chops, tax set-up and bank accounts.
- Organises apostilled parent documents and Chinese translations.
- Sets up the annual report, audit, CIT settlement and profit-repatriation calendar.
Frequently Asked Questions
Can a foreigner own 100% of a Chinese company?
Yes, unless the activity is on the Negative List with an ownership cap or prohibition. Most consulting, trading, technology and manufacturing activities are open to WFOEs.
Is there a minimum registered capital?
Generally no statutory minimum for ordinary activities, but capital should cover start-up costs, and some sectors set their own minimums. Under the 2024 Company Law, subscribed capital must be paid within five years.
Can a representative office invoice Chinese clients?
No. Representative offices are limited to liaison and market research. To sell or invoice, you need a WFOE or joint venture.
Does the legal representative need to live in China?
Not legally, but banks commonly verify the legal representative in person, and the role carries regulatory exposure. Many groups appoint someone who can travel to China reliably.
Are apostilles accepted in China?
Yes, since 7 November 2023 for public documents from other Convention countries. Chinese translations are still needed.
