How to register a company in a small city in China

Since the registration of a full-featured WeChat Official Account requires a Chinese company (although WeChat starts the preparation for allowing foreign companies to register WeChat Official Account, a foreign friend told me that he had waited for over 6 weeks without any response), I decided to open a company in China. This article will introduce the process to register a company in a small city in China. The situation may not be similar if you are in other cities due to the different policies promoted by local governments.

In addition, the author has a little knowlege (studied these courses before) about finance, corporate finance (both Chinese and British versions), commercial bank accounting and accountancy because he is a business student at present.

Background

At present, WeChat is one of the most significant social media in China. Many businesses are running on this platform. WeChat Official Account (aka. 微信公众号 in Chinese) can be a very effective promotion channel for business.

However, the function of WeChat Official Account is very limited for an unverified account (‘verifying’ means that WeChat can identify your company/organisation as a ’legal person’ or entity). As a result, I decided to register a company in my hometown.

Preparation

• As a legal representative, you must have full civil capacity¹ (aka. 完全民事行为能力 in Chinese), which means that you must be at least 18 years old (if you have income to sustain your life, you could be 16 years old minimum).
• Your company to be registered mush have an address. Some local governments start to allow that residential addresses can be used for commercial purposes. The related documents mentioned later is Proof of property.
• You must have an executive director (aka. 执行董事), who is also the legal representative, and a supervisor (aka. 监事), a financial manager（aka. 财务负责人）, three seperate personnels at least. Their IDs must be presented during the registration procedure. In addition, a shareholder cannot be the financial manager.
• Several names for your company which you would like to use. You can check the availability online in advance.

Registration process (for business license)

1. Ask AIC (Administration for Industry and Commerce, aka. 工商局) to check the availability of your company name. The step may be free, depending on local policies. This step can be done at Government Service Centre or AIC. If approved, they will provide a notice of pre-approval of company name (aka. 企业名称预核准通知书) or something similar, which is required by next steps.
2. Prepare necessary documents for registration. The required documents also depends on your local governments, such as:
   • Proof of property (aka. 产权证明, this is direct translation, which may not be very accurate). It is used for application for the permit from low-level governments, such as residents’ committees (normally, aka. 居委会) and street or township government. They will check whether your company address can be used for your business purpose.
   • Company policy (aka. 公司章程). It should satisfy the requirements of the Company Law (aka. 公司法). Templates about company policy could be found on the local AIC websites (for business related contents, the websites may be named ‘Red Shield Information Network’, aka. 红盾信息网).
   • Application form. Different AICs may have different application forms for company registration, containing details such as:
     • shareholding ratio and capital
     • posts
     • address
     • contact information and ID numbers of legal representative, supervisor and financial manager
     • company type
     • business scope (the officers may help to check whether the scope which you provide is valid, but it is better to refer to other companies while writing it)
     • operating period
   • Shareholders’ meeting resolution
   • Lease contract (only if the company address is leased to you)
3. Submit the documents, wait for about 7 working days (it depends, again) and then you can get your business license. Due to the Three in One registration reform, your business license is also your the organisation code certificates and tax registration certificates. In addition, the codes for these three types of licenses or certificates have been uniformed to one, which can be used for registration of WeChat Official Account.

At this point, your company has been registered. The following procedures about opening bank account and taxation registration are much more difficult. Due to the discrepancies of different local authorities and banks, it is less meaningful to introduce the following procedures in detail. They would probably take three times as much time as the registration procedure. A number of tips about these procedures will be illustrated.

Tips for the following procedures

1. As for banks (opening bank accounts for companies), do not trust all of what the bank clerks say. For example, they may ask you to save money into the new account, saying it is a regulations by the central bank. Please be as careful and critical as you can, asking other banks about that because the so-called regulation might be fake. They just want you to save as much money as you could, assuming you are very rich. I think I am helpful, but it much difficult to take the money out of your bank account. It is related to revenue calculation, profit distribution, salary payment and taxation.
2. Concerning taxation, you must implement your own accounts (the accounts here are not bank accounts, they are a term of accountancy) for accounting, calculating your tax to pay. It should be very difficult for a designer or coder without much accounting knowledge to do that so it is very significant to identify a good financial manager or purchase this kind of services. If you know a little about accountancy, there are some free tools of accounting for stat-ups² (sorry, the names can hardly be translated into English):
   • 科目记
   • 柠檬云

Summary

My company is still on its very early stage and I think it not a good idea to write my experience now. However, a number of people have expressed their interests in this topic online. Please be cautious about the contents of my article because my own experience may not be representative and try to find other similar referneces.

To summarise, although start-ups has been promoted considerably by Chinese government, the procedures of opening a company cannot be seen to be very easy and convenient. Moreover, the business license is only a ’ticket’ for entry. Different fields or inductries require many admission permits. Running a company is absolutely a complex task. You have to be very patient and careful. Anyway, it should be necessary characteristic of a businessman or businesswoman.

Acknowledgment

Special thanks to my legal representative and financial manager, you have taken so many efforts on the start-ups.

Bibliography