Setting up a company in mainland China is a complex matter. Although the process has been simplified over the past few years, the complexity of the process still depends on:
- Type of business, e.g. manufacturing, trading or consulting.
- Specific sector, i.e. whether it is encouraged, permitted or restricted for foreign investment – as stipulated by the Foreign Investment Negative List and Positive List.
- Location and support of the local government.
The time needed for registration varies accordingly. It can be as short as one month for simple consulting FIEs, to up to six months or even more for FIEs operating in restricted areas or requiring special permits or approvals. The smoothness of the application process also depends on how well the application documents are prepared. This requires in-depth knowledge of law requirements when drafting the application documents, but also a deep understanding of local practices which may vary from region to region.
Although the entire process can be completed alone, it is strongly advised to seek advice from experienced advisors to avoid mistakes and unnecessary delays. Fees can be very modest especially in case of consulting firms, starting from as low as 12,000 RMB. However, when engaging local advisors to help with the setting up process, one should always be very careful of what services are specifically covered: it has been reported that some advisors may limit their services only to the obtainment of the business licence, without covering other actions that must still be completed after the release of the business licence and before starting operations, such as tax registration, opening bank accounts, carving company seals, etc. It should be clarified at the outset whether such actions are included or not in the scope of the service.
