How to Establish a Successful Trading Company in China

You already buy from China every month, and working through agents and suppliers' export licences is starting to limit you: you cannot invoice in China, hold stock there or control quality directly. A trading company in China, historically known as a Foreign Investment Commercial Enterprise (FICE), gives you that control. By the end of this guide you will know what such a company can do, which products are restricted, what capital and documents you need, and the steps from name registration to your first shipment.

When a trading company in China makes sense

Companies usually set up a trading company once their business with China reaches a steady volume, or when they want a physical presence in the country. It is worth considering if any of these apply to you:

• You source from several factories and want your own team to handle logistics and quality control.
• You want to buy finished or semi-finished products and resell them inside China as an intermediary.
• You want to import goods into China for wholesale or retail sale.
• You want a full sales platform in China with after-sales service.
• You need a support and liaison base in China for your head office in the Gulf.

If you only need to buy from China and ship home a few containers a year, a sourcing agent may be enough. If you need to invoice, hire staff, hold stock or pay suppliers in CNY from your own account, a company is the stronger option. Our guide to establishing an import and export company in China compares the structures in more detail.

What a foreign-owned trading company can do

A foreign-invested trading company can cover four kinds of commercial activity. The ones you choose go into the company's business scope, so decide them before you register.

Retail

Selling goods from fixed premises or remotely, by television, phone, mail, internet or vending machines. If you plan to sell online to Chinese consumers, see our guide to digital marketing strategies to reach Chinese consumers.

Wholesale

Selling goods to retailers, industrial and commercial customers, and other wholesalers. For most Gulf traders this sits alongside import and export, which lets the company buy from Chinese factories, issue VAT invoices and ship abroad in its own name.

Franchising

Licensing the use of your trademarks, trade names and business model in exchange for royalties or franchise fees. Register your trademark in China before you license it, because China follows a first-to-file system.

Commission agency

Acting as a sales agent, broker or auctioneer for goods, earning a commission rather than owning the stock.

Rules and requirements today

Many older guides describe a separate approval regime for FICEs. Since China's Foreign Investment Law took effect on 1 January 2020, a trading company is set up much like any other company: it registers with the local market regulation bureau and reports its investment information to the commerce authorities through the same system. Most trading activities no longer need prior approval.

Investor requirements

The investor, whether an individual or a company, should have a good reputation and no record of violating Chinese laws. Banks and registration officers will review your identity and background documents, so make sure they are consistent and current.

Restricted products

Restrictions or special licences still apply to some products, including books, periodicals and newspapers, pharmaceutical products and agricultural chemicals such as pesticides. Food, cosmetics, medical devices and hazardous chemicals also need specific permits. Check the current Special Administrative Measures for Foreign Investment Access, known as the Negative List, published by the National Development and Reform Commission and the Ministry of Commerce, before you finalise your business scope.

Registered capital

There is no fixed minimum for most trading companies, but under China's amended Company Law, in force since 1 July 2024, a limited liability company must pay in its subscribed capital within 5 years of registration. Set an amount you can actually fund and that covers rent, salaries and working capital for your first months. Banks and some suppliers look at registered capital when deciding how far to trust a new company.

Operating term

Older rules capped a FICE's operating term, generally at 30 years, or 40 years in central and western regions. Today the term is set in the articles of association, and many companies register a long-term operating period. Confirm the options with the registration office in your chosen city.

Documents you will need

The exact list depends on the city and whether the investor is a person or a company, but you should prepare:

• A completed registration application form.
• Articles of association, signed by all investors.
• Proof of each investor's identity: a passport for individuals, or a certificate of incorporation for companies, notarised and apostilled or legalised depending on your home country.
• A bank reference letter for each investor.
• Recent audited financial statements for a corporate investor, if requested.
• A lease or registered address agreement for the company's premises in China.
• Passport copies and appointment documents for the legal representative, director and supervisor.
• A description of the goods the company will import, export or sell, which forms the basis of the business scope.

Foreign documents usually take the longest. Start notarisation in your home country at least 3 to 6 weeks before you plan to file.

Step-by-step setup

1. Choose the city and address. Consider where your suppliers are and whether a free trade zone suits your trade. The address must be a real commercial premises that accepts company registration.
2. Reserve the company name with the local market regulation bureau.
3. Prepare and legalise investor documents in your home country.
4. File the registration with the articles of association, business scope and capital details. Once approved, you receive the business licence with its unified social credit code.
5. Carve the company seals and register them with the police.
6. Open the corporate bank accounts, a basic CNY account and usually a foreign currency capital account. Banks often ask the legal representative to attend in person.
7. Complete tax registration and decide with your accountant between small-scale and general VAT taxpayer status. Exporters usually need general taxpayer status to claim export VAT refunds.
8. Register with customs as a consignor and consignee of import and export goods, so the company can clear goods in its own name.
9. Hire staff and arrange work permits for any foreign employees; see our guide to work permits and social security for foreigners in China.

From complete documents to an operating bank account, most companies take 1 to 3 months. Document legalisation abroad and bank account opening cause most delays.

Running the company after registration

Registration is the start, not the finish. A trading company in China has regular obligations, and missing them can freeze your bank account or block customs clearance.

• Monthly or quarterly VAT and corporate income tax filings, including nil returns in months with no sales.
• An annual corporate income tax reconciliation and an annual report to the market regulation bureau, usually due in the first half of the year.
• Bookkeeping in line with Chinese accounting standards, with VAT invoices (fapiao) kept for every purchase and sale.
• Social security and housing fund contributions for every employee, local or foreign.
• A licence amendment whenever you change address, capital, legal representative or business scope.

Budget for these costs from the first month. Once the company is trading, compare your total landed costs against buying through agents; our guide to strategies to reduce import costs shows where a local company saves money.

Common mistakes when setting up a trading company

• Writing a business scope that is too narrow, then needing a licence amendment before you can sell a new product line.
• Subscribing a large registered capital to look impressive, then struggling to pay it in within 5 years.
• Using an address that cannot legally host a company, which can lead to an abnormal operations listing.
• Starting to trade before the bank, tax and customs registrations are complete.
• Ignoring monthly tax filings in months with no sales; nil returns are still required.
• Paying new suppliers carelessly once you have a Chinese bank account; our guide to safe payment strategies with Chinese suppliers explains how to avoid fraud.

What to do this week

1. Write down the activities you need: import, export, wholesale, retail, franchising or agency.
2. Check your products against the current Negative List and any special licence requirements.
3. Decide the city and budget for the registered capital and first year's running costs.
4. Ask a notary in your home country about the time and cost to notarise and apostille or legalise your documents.
5. Shortlist two or three addresses that accept company registration.

If you would rather have the registration, bank account and tax setup handled for you, HiGreenPanda's company formation service manages each step in Shenzhen and Shanghai.