How to Set Up an LLC in China

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Foreign entrepreneurs are increasingly setting up new businesses in China to take advantage of China's booming and rapidly expanding economy. The legal entity of a Limited Liability Company (LLC) in China may be either registered as a Joint Venture (JV) or a Wholly Foreign Owned Enterprise (WFOE). The type of legal entity depends on the size and structure of the company you wish to set up. The procedures and regulations governing both types of enterprises is often a long and complex procedure.

Conduct thorough market research before starting up your company. The market for goods and services in China varies from province to province, and competition for most products is fierce. Consult a market research firm or the American Chamber of Commerce who will provide you information on your business's niche.

Abide by the requirement for registering a company in China. As of September 2010, for joint ventures, a minimum of $4,411 (30,000 RMB--Chinese yuan) of registered capital is required. For Wholly Foreign Owned Enterprises, a minimum of $147,029 (1,000,000 RMB) or registered capital is required.

Submit information of your business to the local State Administration for Industry and Commerce (SAIC). Information should include reports regarding the feasibility of your project, as well as information relating to land-use, wages and financing. If your business is to be a joint venture, information about your Chinese business partner should also be submitted.

Register your business and obtain a business license at the SAIC. A similar selection of the documents used for the project approval stage is needed for registration. After registration, your joint venture or WFOE will be regarded as a legal entity.

Register with any relevant local government authorities, such as the tax, police, utilities and statistical bureaus. Companies are only permitted to conduct business after they are officially registered with any government authority that may have an interest with your company. For example, if your company is involved with producing high amounts of waste, your company must be registered with the Ministry of Environmental Protection.



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