How a foreigner can open a company in China

China remains one of the most attractive destinations for international business. The country combines the world's largest manufacturing base, developed digital infrastructure, a large domestic market, and efficient logistics, making it a key hub for global trade, manufacturing, and technological innovation.

Over the past few years, the rules for foreign investors have become significantly more transparent. After the PRC Foreign Investment Law came into effect, most entrepreneurs gained the ability to register companies without a mandatory Chinese partner — provided the chosen industry is not on the Negative List of restrictions.

However, company registration is only the first step in entering the Chinese market. Far more important is choosing the right legal structure, determining the registration region, opening bank accounts, and setting up a tax and corporate compliance system. It is these decisions that largely determine how quickly a business can begin full-scale operations in China.

Advantages of Registering a Company in China

For foreign entrepreneurs, China is not only a market with billions of potential consumers but also an opportunity to integrate into the world's largest ecosystem of manufacturing, supply chains, and international trade.

• Access to the largest consumer market

China remains one of the world's largest consumer markets. It is home to an audience with high digital engagement, a mature online payment system, and rapidly growing demand for international brands.

• A world-class manufacturing ecosystem

China's key competitive advantage is the concentration of suppliers, manufacturers, logistics operators, and export infrastructure. For companies operating in manufacturing, e-commerce, or international trade, this can significantly reduce time-to-market.

• Full control over the business

In most industries, foreign investors can register a company with 100% foreign capital and make strategic decisions independently, without a mandatory local partner.

• The ability to conduct official commercial activity

After registration, a company obtains the right to:

• enter into contracts in its own name;
• issue official tax invoices (fapiao);
• open corporate bank accounts;
• hire Chinese and foreign employees;
• import and export goods, subject to the necessary permits.

The ability to work directly with Chinese counterparties without intermediaries is one of the strongest arguments in favor of registering your own company.

Regulatory Framework

The modern system for regulating foreign investment is based on the PRC Foreign Investment Law, which has been in effect since January 1, 2020. The document replaced the previous model of separate laws for different forms of foreign business and effectively equalized most foreign companies' rights with those of Chinese legal entities.

The new model is built on four key principles:

• national treatment for foreign investors;
• a “pre-establishment national treatment plus Negative List” system;
• protection of investments and intellectual property;
• unified corporate rules in accordance with the PRC Company Law.

Negative List — an official catalog of industries where foreign investment is restricted or prohibited.

If the chosen business activity is not on this list, a foreign investor can register a company under virtually the same conditions as a local entrepreneur. In regulated sectors, requirements for joint ventures, licensing, or project approval by government authorities may still apply.

One of the most significant changes in recent years has been the reform of corporate legislation, which simplified the rules for establishing companies with foreign capital. Previously, registration requirements depended on the form of business and could differ for foreign and Chinese companies, but today most legal entities operate under unified corporate rules.

The requirements for registered capital have also changed. An entrepreneur is no longer required to deposit the entire declared amount immediately upon company registration; however, the registered capital must be fully paid up within five years. This approach gives businesses more flexibility at the outset, but simultaneously requires a realistic assessment of the capital amount: an amount that is too low can complicate working with banks, obtaining certain licenses, and cooperating with major Chinese partners.

Types of Companies

Chinese law provides for several forms of presence for foreign investors. The choice depends on the business model, planned operations, and the need to work directly with Chinese clients.

Limited Liability Company (LLC)

This is the most common form of doing business. Key features:

• limited liability of members;
• one or more founders;
• independent management of the company;
• the right to receive profits and conduct full-scale commercial activity.

It is in this form that most foreign companies are registered today.

Wholly Foreign-Owned Enterprise (WFOE)

Despite the legislative reform, the term WFOE (Wholly Foreign-Owned Enterprise) remains widely used in business practice. This format allows you to:

• fully own the company;
• independently manage operational activities;
• enter into contracts;
• generate revenue;
• issue fapiao;
• hire employees.

This is why WFOE is considered the most versatile model for consulting, technology, service, and trading companies.

Trading Company (FICE)

FICE (Foreign-Invested Commercial Enterprise) — a specialized form of foreign company for commercial activity. It is suitable for businesses that plan to:

• import products;
• export goods;
• engage in wholesale trade;
• work with distribution within China;
• develop e-commerce.

For this format, it is important to consider the requirements of customs and trade legislation.

Joint Venture

A joint venture involves establishing a business together with a Chinese partner. This option remains relevant if:

• the industry is on the Negative List;
• access to local licenses is required;
• existing connections and sales channels within the country are important.

Representative Office

A representative office is the simplest way to establish a presence in the market, but its capabilities are significantly limited.

It can:

• conduct market research;
• hold negotiations;
• represent the interests of the parent company.

At the same time, a representative office is not entitled to generate commercial revenue or issue invoices.

Which Form Do Foreign Investors Choose?

In recent years, the preferences of foreign entrepreneurs have noticeably shifted. While many companies previously had to find a Chinese partner to enter the market, today most investors choose the WFOE model, as it provides maximum autonomy in decision-making.

The main advantage of this format is full control ov