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In recent years, mainland China has relaxed various market restrictions to attract foreign investors. As a Hong Kong entrepreneur, expanding your business into mainland China can bring about abundant opportunities. The mainland China market is thriving, with a large consumer base and emerging industries. Opening a company in mainland China will allow you to enter this massive market more effectively and quickly, and explore new business opportunities. This article will provide a detailed breakdown of the process and steps for Hong Kong individuals to open a company in mainland China, making it easier for you to enter the mainland market.

Registration Preparation Guidelines 

Types of Companies

Wholly Foreign Owned Enterprise (WFOE)

A company established and controlled by a foreign investor, with 100% ownership by a natural person or an enterprise (foreign, Hong Kong, Macau, or Taiwan enterprise). WFOE is a limited liability company, where shareholders only bear limited company debts.

Foreign-Invested Partnership Enterprise

Similar to WFOE, but with two or more shareholders (natural persons or enterprises).

Sino-Foreign Equity Joint Venture

An independent enterprise established through cooperation between one or more mainland Chinese enterprises or individuals and one or more foreign investors (foreign individuals or enterprises, or Hong Kong, Macau, Taiwan investors).

Company Structure

Shareholders

The number of shareholders for a limited liability foreign-owned enterprise is 1-50. Shareholders can be any non-Chinese nationalities. Residents or companies from Hong Kong, Macau, and Taiwan are considered foreign investors.

Legal Representative

The legal representative refers to the primary person responsible for representing the entity and conducting activities on behalf of the company. The corporate entity is liable for the actions of its legal representative and other employees. Every foreign-owned company registered in Shenzhen must appoint one legal representative, who can be a natural person of any nationality.

Directors

A WFOE must appoint at least one director (executive director), who can be a natural person of any nationality and does not need to reside in mainland China. The director can also serve as the legal representative and general manager. If a board of directors is established, 3-13 directors must be appointed.

Supervisors

A WFOE must appoint at least one supervisor as the company's overseer. Supervisors can be natural persons of any nationality and do not need to reside in mainland China. Directors, general managers, and legal representatives cannot serve as supervisors.

Establishing Company Name

The basic format for a foreign-owned company name is based on the region/industry, followed by "Limited Company." For example, "Shenzhen XXX Trading Limited Company" or "XXX Trading (Shenzhen) Limited Company," where Shenzhen represents the registration region, and Trading represents the industry. After drafting a foreign-owned company name, you can conduct a name search to ensure there are no duplicate names and then apply for name pre-approval.

Registering Company Address

When applying to establish a foreign-owned company, investors must lease and register an office space in advance to obtain a legal and usable company registration address. There are two ways to obtain a company registration address:

Physical Office Space

You can lease a suitable office space in commercial or industrial areas, such as traditional offices or serviced offices, as your company's registration address. Factors such as location, transportation, and rent should be considered in the early stages of setting up your business.

Virtual Registered Address

Company registration agents generally provide their company address for registration purposes. This method usually has lower charges and shorter processing time, which can expedite the company registration process.

Registered Capital

There is currently no minimum registered capital requirement for limited liability companies, and there is no need to submit capital verification reports. Shareholders can agree on the amount, method, and period of capital contribution and record it in the company's articles of association. Before generating profits or income, the registered capital is the company's only legal source of funds. Therefore, investors should determine the appropriate investment amount based on business needs and company scale.

Preparation of Key Documents

• Hong Kong, Macau, Taiwan Residents: Hong Kong/Macau Exit-Entry Permit or Taiwan Compatriot Permit
• Foreign Nationals: Original passport (with proof of entry and exit within the past six months, or else notarization is required)
• Notarized Documents
  
  • Certificate of Incorporation
  • Business Registration Certificate
  • Latest Annual Return/NNC1 Form
  • Shareholders' and Directors' Lists
  • Registration certificates of shareholders and directors
  • Director's signature samples

Foreign investors who invest in mainland China under the name of a Hong Kong company, whether it is establishing a wholly foreign-owned enterprise or a joint venture, need to notarize the relevant documents of the Hong Kong company. It should be noted that different receiving agencies in different regions may have different requirements for notarized documents. Therefore, foreign investors should confirm the requirements of the local receiving agency before proceeding with document notarization to avoid any delays.

Company Establishment Process 

1. Approval of Company Name

The company name should include the region, number, and industry category. Once approved, the name reservation is valid for one year.

2. Completing Business Filing

Business filing is now conducted online.

3. Handling Business License "Five-in-One"

• Business License:Document that contains the company's main information.
• Business’ tax registration certificate:Document that contains company information such as tax number and taxpayer's name.
• Organization Code:Proof of the company's legal operation shown to customers.
• Social Security Registration Certificate:Document that employers must hold.
• Statistical Registration Certificate:Document designed for statistical purposes.

Registration materials:

Preliminary Approval Notice of Business Name, Articles of Association, Legal person identification, Application form, etc.

To obtain the license, it is recommended to apply online through the online registration system. This system supports online registration, document uploading, and electronic signatures. If necessary, consider consulting professional consultants. When registering a company in mainland China and applying for a business license, it is also necessary to list the company's business activities.

Currently, the main services provided include services/consulting/trade/import-export/technology/engineering/industrial/commercial, and other national economic industries' business activities. Companies can choose cross-industry business scopes according to their own needs.

After obtaining the business license, if engaging in certain industries such as food, beverages, construction, and telecommunications, additional qualification licenses need to be applied for.

4. Handling Company chop Engraving Filing

Handle the engraving of official company chop, financial chop, and legal representative’s personal chop, and file them with the relevant departments to take effect. The official company chop is a proof after the company's legal representative signs, while the financial seal is used to stamp financial data to ensure the authenticity and validity of accounts.

5. Handling Tax Registration and Determining Tax Types and Tickets

All companies in mainland China must comply with tax regulations, so tax registration needs to be carried out and related real-name verification, financial personnel registration, and invoice application need to be arranged.

Registration materials:

• Company's business license copy,
• Legal person identification,
• Application form, etc.

6. Opening Bank Accounts and Foreign Exchange Registration

Businesses must have a bank account for operations. It is recommended to choose large state-owned banks or multinational banks, which have a wide range of services and convenient procedures. They come in handy when submitting tax declarations and payments.

Account opening materials:

• Original copy of the business license,
• Company chops,
• Lease contract of the registered address
• Original identification of the legal person
• Original identification of the financial officer

7. Applying for Import and Export Rights (if necessary)

If you need to handle import and export operations on your own, additional registration needs to be applied for.

The entire process of registering a foreign company generally takes about 15 working days, so it is recommended to prepare the above items in advance for the smooth establishment of a mainland China company.

Conclusion

Opening a mainland China company is an important step for Hong Kong entrepreneurs to pursue success. The mainland market has enormous potential and business opportunities that can help expand businesses and increase profits. Hong Kong entrepreneurs can formulate more effective business strategies and expansion plans and smoothly enter the mainland market by thoroughly understanding the establishment steps and process details of mainland companies.

With nearly 20 years of experience in establishing companies domestically and internationally, OneStart Business Center provides comprehensive business support to help you easily achieve your entrepreneurial dreams! To learn more about establishing a mainland company, call 3575 6888 or WhatsApp OneStart Business Consultant for inquiries.

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