Set up a company in China from A to Z with 100% foreign ownership

You want a company in your name in China that buys directly from factories, issues invoices and receives payments, but you do not know where to start or how long it takes. A foreigner can set up a company in China with 100% ownership and no Chinese partner in most trading activities, and everything you need to know is in this guide. By the end you will know which company type suits you, which documents you need, the order of the steps, and the obligations that begin once you receive the licence.

Can a foreigner own 100% of a company in China?

Yes. A wholly foreign-owned enterprise, known as a WFOE, is a limited liability company owned solely by a foreign investor, whether an individual or a company. Since the Foreign Investment Law took effect in 2020, these companies are treated like domestic companies at registration, with one important exception: the negative list for foreign investment.

The negative list sets out the sectors that are closed to foreigners or restricted by conditions, such as a required Chinese partner or a maximum ownership share. General trading, import and export, wholesale, retail and business consulting are outside the list, so a Gulf trader can usually own the company outright. Before you define your activity, check the latest version of the list on the website of China's Ministry of Commerce or the National Development and Reform Commission, because it is updated periodically.

What are the alternatives to a WFOE?

• A representative office: allowed only to do liaison, market research and supplier follow-up. It cannot issue invoices or collect revenue.
• A joint venture with a Chinese partner: needed only in restricted sectors, and it adds complexity to management, profit sharing and decision-making.
• A Hong Kong company: a separate entity with its own laws and banks, which some traders use for international collections. It does not give you a legal entity in mainland China and cannot issue Chinese invoices.

If your aim is to buy from factories and export goods to the Gulf in your own name, the WFOE is the clearest choice. We explain this model in more detail in our guide on how to establish an import and export company in China, and if your plan includes a sales office and a local team, read how to establish a successful trading company in China as well.

What do you need to prepare before you start?

Most delays come from missing documents or a decision left open before the application. Prepare this list before you contact anyone:

• A valid passport for the shareholder, the legal representative, the director and the supervisor, with clear colour scans of the data page.
• If the shareholder is a company: its commercial registration, articles of association and a shareholders' resolution to invest in China, duly legalised and translated into Chinese.
• Three to five proposed company names in Chinese, in order of preference, because the first may already be taken.
• A precise business scope that covers everything you will actually do, such as wholesale, import and export and consulting.
• A registered commercial address with a proper lease in the city where you will incorporate.
• The amount of registered capital and its payment schedule.
• A Chinese phone number and an email address for dealing with the authorities and the bank.

Legalisation: apostille or consular?

China joined the Hague Apostille Convention, which took effect there in November 2023. If your country is a party to the convention, an apostille from the competent authority in your country is enough for the corporate shareholder's documents. If it is not, you need the traditional route: legalisation by your foreign ministry and then by the Chinese embassy or consulate. Check your foreign ministry's website before you start, because this step alone can take 1 to 3 weeks. An individual investor usually needs only a passport, and identity is verified at signing or online.

The steps to set up a company in China, in order

1. Choose the city and district. Shenzhen, Guangzhou and Yiwu are close to factories and ports; Shanghai is a financial and services hub. The district within the city affects the availability of addresses, incentives and processing speed.
2. Reserve the company name through the local market regulation system. A name is usually made up of the city, the trade name, the activity and the legal form.
3. Rent a registrable commercial address, sign the lease, and get proof from the landlord that the property is commercial.
4. Prepare the articles of association and the appointment documents for the legal representative, director and supervisor, and have the shareholder sign them.
5. Submit the application to the local Administration for Market Regulation (AMR), online in most cities, and complete identity verification.
6. Collect the business licence, which carries the Unified Social Credit Code, the company's business and tax number in one.
7. Have the company seals carved by an approved maker and registered: the company seal, the finance seal, the legal representative's seal and the invoice seal.
8. Register with the tax bureau, appoint an accountant and activate the electronic tax invoice (fapiao) system.
9. Open the bank accounts, the basic renminbi account and the foreign currency capital account, and complete the foreign investment registration with the bank.
10. If you will import or export, register with China Customs through the Single Window, then complete the trade foreign exchange registration with the bank so you can collect export proceeds.

From name reservation to licence usually takes 1 to 3 weeks if the documents are complete. The seals and tax registration take a few days after that. Opening the bank account is usually the slowest step and can take 1 to 4 weeks, depending on the bank and whether it requires the legal representative in person. Plan for 1 to 2 months from the start until the company can actually buy and collect payments.

Three decisions foreigners often get wrong

Who fills the mandatory positions?

The usual structure for a small company is a legal representative, a director and a supervisor. An individual shareholder can be both legal representative and director, but the supervisor cannot be the director, so many traders appoint a relative or a trusted partner. The legal representative answers to the authorities, appears on the licence and may have to attend the bank in person. Choose someone who can travel to China when needed and reads what they sign, and do not hand the role to a middleman you do not know. Changing the legal representative later is possible, but it is a full procedure with the market regulator, the bank and the tax bureau.

How much registered capital do you really need?

Since the 2014 reforms there has been no general minimum capital for most trading activities, and you set the amount. But the revised Company Law, in force since 1 July 2024, requires shareholders to pay in the full subscribed capital within 5 years of incorporation. So do not write a large figure to make the company look stronger, because you will be legally bound to pay it.

The practical rule: choose capital that covers the first 6 to 12 months of costs, meaning rent, salaries, accounting, visa fees and running costs. Some banks and work permit authorities look at capital when assessing the company, so a very low figure can make a residence application harder later. Check any requirements specific to your activity with your city's market regulation office before you fix the figure.

Why is the registered address a common trap?

Every company in China needs a registrable commercial address, and residential flats are refused in most cities. Some districts allow virtual or incubator addresses for certain types of company, but the fake addresses some middlemen sell can end with the company on the abnormal business list after the first inspection, which freezes the bank account and blocks visas. See what a legal registered business address involves before you sign any contract. Before you sign a lease, check that:

• The property is classified as commercial or office use on the title deed.
• The landlord provides a copy of the title deed and of their ID or company licence.
• The lease can be registered in the name of the new company.
• The lease runs for at least a year, with clear renewal terms.
• The premises receive official mail, and an inspector can reach them and confirm the company is there.

What obligations begin once you have the licence?

The licence is the start of your obligations, not the end. A company that ignores them builds up fines even if it sells nothing.

Tax and accounting

The standard corporate income tax rate is 25%, with reduced rates for small low-profit enterprises under conditions announced by the Ministry of Finance. VAT on the sale of goods is 13% for a general taxpayer and lower for a small-scale taxpayer. You must file monthly or quarterly returns even with no sales, known as nil returns, and late filing brings fines and lowers the company's credit rating. Arrange accounting and tax filing before your first month ends.

Annual report and audit

Every company submits an annual report on the previous year through the National Enterprise Credit Information Publicity System between 1 January and 30 June. In most cities, foreign-invested companies also need an audited financial report from a licensed accounting firm, so ask your accountant what your city requires.

Residence and work permit

Owning a company does not give you residence automatically. If you want to live in China and run the company from there, you need a work permit and residence permit sponsored by the company itself, plus social security registration. We explain this in our article on the work permit and social security card change for foreigners.

What does the company cost in the first year and after?

The information in this guide is free; setting up a company is not. Government registration fees are limited, but the real cost is in the recurring items. Budget for:

• Rent for the registered address, which varies widely between cities and between districts in the same city.
• The incorporation agent's fee, if you use one.
• Legalisation and translation in your country.
• Carving the seals.
• Monthly accounting, the annual report and the audit.
• Monthly bank account fees and transfer charges.
• Visa, work permit and social insurance if you employ yourself or others.

Ask any provider for a written quote that separates incorporation fees from recurring annual fees, and ask specifically about the cost of accounting and the address in the second year, because that is what you will actually pay over the long run.

Common mistakes when setting up a company in China

• A narrow business scope: without import and export you cannot register with customs, and changing it later needs a new filing with the market regulator.
• Inflated capital that legally binds you to pay it within 5 years.
• A fake or residential address that exposes the company to the abnormal business list.
• A legal representative who cannot attend the bank when asked, which delays the account by weeks.
• Skipping nil returns because the company has not sold anything yet.
• Handing the original seals to a third party with no written record of their use.
• Relying on a middleman's verbal promises without a contract that sets out services, timelines and fees.

What to do this week

1. Write on one page what the company will do: what it will buy, from which city, and to which country it will ship. This decides the business scope and the city.
2. Check the negative list for foreign investment and confirm your activity is outside it.
3. Open your foreign ministry's website and check whether your country is a party to the Apostille Convention.
4. Prepare passport scans and write 3 to 5 proposed company names.
5. Set a budget for the capital and for the first 12 months of costs.

If you want someone to handle the procedures for you on the ground in Shenzhen or Shanghai, the HiGreenPanda team takes care of company formation in China from name reservation to opening the bank account.