How to Set Up a Company and Build a Team in China: The Complete Guide
Mar 26, 2025
"Learn how to set up a company in China as a foreigner—step-by-step guide on WFOE registration, costs (¥2,000+), visas, hiring, and compliance. Includes 2024 tax rates, business scope rules, and agency fees to launch successfully in Shanghai/Shenzhen."
How to Set Up a Company and Build a Team in China: The Complete Guide
Expanding your business into China offers immense opportunities, but navigating the legal, financial, and operational requirements can be complex. Whether you're a foreign entrepreneur, a student exploring future ventures, or an established company entering the Chinese market, understanding the setup process is crucial.
This guide breaks down everything you need to know—from company registration and costs to hiring employees and compliance—based on a real consultation with a China-based corporate services firm.
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Key Steps to Setting Up a Company in China
1. Company Setup Basics
Timeline: 7–15 working days to register a company in Shanghai.
Shareholders:
Can be an individual (foreigner or local) or an overseas legal entity (more complex).
Student visa holders can register a company but cannot work for it until they obtain a work visa.
Legal Representative: Can also be the shareholder (single-person setup possible).
2. Key Registration Requirements
Company Name:
Chinese name is mandatory; English name optional for stamps.
Only one "main industry" can appear in the name.
Business Scope:
Can include multiple activities (e.g., software, tourism, trading) in one license.
Special licenses required for regulated industries (e.g., import/export, food/beverage).
Can expand scope later with no extra cost.
Registered Capital:
No minimum requirement, but recommended ≥50,000 RMB.
Must be paid within 5 years (used for operations like rent/salaries).
Physical Office:
Must be in the same city as registration (e.g., Shanghai).
Co-working spaces not recommended for foreign-invested companies; standalone office or commercial/residential space required.
Taxes and Accounting
VAT Rates: Vary by sector (e.g., 6% for consulting, 13% for product sales).
Accounting Services:
~9,600 RMB/year for bookkeeping and tax filing.
Extra ~1,200 RMB/year for invoicing services (mandatory for local transactions).
Invoices:
Local (Chinese-style) and international (proforma) invoices differ.
Banking and Finance
Bank Accounts:
RMB account (1,000 RMB fee) and foreign currency accounts (e.g., USD, 1,500 RMB fee).
Recommended banks: Bank of China, ICBC, or HSBC (higher fees).
Cross-Border Payments:
Require contracts/invoices for transfers.
No direct Nepal-China banking solutions mentioned; USD accounts facilitate transfers.
Hiring and Visas
Work Visa Requirements:
Bachelor’s degree + 2+ years of relevant experience.
Salary must meet local standards but can be deferred until revenue is generated.
Hiring Options:
Direct Hire: Pay social insurance/housing fund (required for local employees).
EOR (Employer of Record): For remote hires in other cities; agency handles payroll/compliance.
Post-Setup Obligations
Tax Registration: Must be completed within 1 month of incorporation.
Monthly Compliance: Bookkeeping, tax filings, and invoicing managed by accounting teams.
Industry-Specific Notes
E-Commerce: May require a local entity to sell on platforms like Alibaba/Xiaohongshu.
Import/Export:
HS codes determine customs duties (varies by product).
Quality control handled by logistics/customs agencies.
Tourism/Herbal Medicine: Special licenses needed; no tax exemptions for niche products.
Agency Services & Costs
Fees:
Company registration: 2,000 RMB.
Bank account setup: 1,000–1,500 RMB per currency.
Other Support: Office leasing, HR/talent sourcing, visa processing.
Pitfalls to Avoid
Student visa holders cannot self-sponsor work visas until graduation.
Avoid shared offices if planning work visa applications.
Register broad business scope upfront to avoid future amendments.
Networking & Delegations
Leverage chambers of commerce or agencies (like Global Enterprise Services) for B2B introductions.
For trade delegations (e.g., Brazil-China), provide attendee profiles/industries to target relevant companies.
Cost Breakdown for Setting Up a Company in China
Expense | Cost (RMB) | Details |
|---|---|---|
Company Registration | 2,000 | Agency fee (no government charges). |
Bank Account (RMB) | 1,000 | Basic corporate account (Bank of China). |
Bank Account (USD) | 1,500 | Additional fee per foreign currency account. |
Annual Accounting | 9,600 | Monthly bookkeeping and tax filings |
Invoicing Service | 1,200/year | Issuing official Chinese invoices. |
Office Lease | ~5,000–15,000/month | Standalone space (required for work visas). |
Work Visa Processing | ~3,000–8,000 | Agency fees + compliance costs. |
EOR Service (Remote Hire) | ~3,000–6,000/employee/month | Covers payroll, insurance, and compliance. |
Total First-Year Estimate
Low Range: ~ 22,800 RMB (registration + bank + accounting + 1-month office).
High Range: ~ 50,000+ RMB (includes visa, invoicing, and 3+ months office rent).
Final Thoughts: Is China Right for Your Business?
Setting up a company in China is **fast (2–3 weeks for registration)** but requires careful planning in:
✅ Legal structure (WFOE vs. joint venture)
✅ Business scope (avoid future amendments)
✅ Tax compliance (monthly filings are mandatory)
✅ Visa strategy (student → work visa transition)
While costs are manageable, working with a local agency can streamline the process—especially for banking, visas, and compliance.
Next Steps:
Define your business scope broadly to avoid restrictions.
Budget for first-year costs (~23,000–50,000 RMB).
Plan visa transitions early if you're on a student/residence permit.
Consider EOR services if hiring remotely across cities.
China’s market offers huge potential, but success depends on getting the setup right from day one. Need help? Consult a legal/agency expert before diving in.