Set up a company in China.
The world’s second-largest economy, 1.4 billion consumers, and the most demanding regulatory environment of any major market. WFOE formation with 100% foreign ownership is now standard under the Foreign Investment Law. CIT can be as low as 5% for qualifying small enterprises, 15% for High and New Technology Enterprises, and R&D spending is super-deductible at 200%. Our new Shanghai office is on the ground for clients entering or scaling in Greater China.
To set up a company in China, foreign investors typically establish a Wholly Foreign-Owned Enterprise (WFOE — 外商独资企业) — a Chinese limited liability company with 100% foreign capital. Under the Foreign Investment Law 2020, WFOE formation is now standard for activities outside the Negative List. You reserve the company name with SAMR (State Administration for Market Regulation), draft the Articles of Association, register the company to obtain the Business License, then complete tax registration with the State Taxation Administration, FX registration with SAFE, company-seal registration with the Public Security Bureau, and social insurance and housing fund registration.
Standard formation takes 10 to 16 weeks for a service WFOE in Shanghai, longer for trading or manufacturing WFOEs that need import-export or environmental licences. Standard CIT is 25%, but a reduced rate applies in many cases: 15% for HNTE (High and New Technology Enterprises), 15% in priority Free Trade Zones (Shanghai Lingang, Hainan FTP, Hetao Shenzhen-HK), and an effective 5% for Small Low-Profit Enterprises on the first RMB 3m of taxable income through 2027. R&D spending qualifies for a 200% super-deduction.
Grant & Graham’s Shanghai office (new for 2026) coordinates the engagement end-to-end through senior Chinese legal, tax and accounting counsel — SAMR registration, MOFCOM where required, tax registration, SAFE FX setup, bank account opening, sector licences, and ongoing accounting and compliance.
25% standard. 5% for SLPEs. 15% for HNTEs. 200% R&D.
China’s headline 25% CIT is materially reduced for most early-stage WFOEs once the right regime is applied. Small Low-Profit Enterprises pay an effective 5% on the first RMB 3m of taxable income through 2027. High and New Technology Enterprises pay 15%. Qualifying companies in Shanghai Lingang, Hainan Free Trade Port, Hetao Shenzhen-HK Innovation Zone, and Nansha pay 15% on encouraged industries. R&D spending is super-deductible at 200% for most companies and 220% for integrated circuits and CNC machine tools (through December 2027) — one of the world’s most generous innovation regimes.
Other notable items: VAT 13% on most goods, 9% on transport/utilities/basic goods, 6% on most services. Small-scale VAT taxpayers (revenue ≤ RMB 5m): 3% reduced to 1% through Dec 2027. Hainan Free Trade Port: 15% CIT for encouraged industries and 15% IIT cap for qualifying employees — the most aggressive incentive package in China. WHT 10% standard on outbound dividends, interest, royalties — treaty reductions widely available. Urban Maintenance & Construction Tax + Education Surcharges total ~7–12% of VAT payable. Social insurance & housing fund (五险一金) employer contribution typically 28–35% on gross salary in Shanghai. ~110 double taxation treaties.
Nine reasons businesses choose China.
China is the most complex jurisdiction we operate in. It is also where, for many businesses, the upside justifies the complexity. With operations on the ground in Shanghai, Grant & Graham coordinates the full lifecycle — entry, scale, exit if needed — through senior Chinese counsel.
The 1.4 billion consumer market
The world’s largest consumer market. Middle-class population estimated at 400 million and growing. Online retail penetration the highest of any major economy. Annual retail sales exceed RMB 47 trillion. For consumer brands, the size of the addressable market alone justifies the structural complexity.
200% R&D super-deduction
The R&D super-deduction is among the most generous innovation incentives globally. RMB 1m of qualifying R&D becomes RMB 2m of deductible expense (RMB 2.2m for integrated circuits and CNC machine tools). Real cash impact on the CIT bill, layered on top of HNTE 15% status where applicable. Through December 2027.
100% foreign ownership (WFOE)
Under the Foreign Investment Law 2020, WFOEs with 100% foreign ownership are the default for activities outside the 2024 Negative List. No mandatory local partner. Foreign investors enjoy national treatment in pre-establishment and operation. The Negative List has shrunk every year since 2017.
Free Trade Zones & preferential regimes
22 Free Trade Zones nationally. Priority regimes: Shanghai FTZ (financial services, services), Hainan Free Trade Port (15% CIT + 15% IIT cap, the most aggressive package), Shenzhen-Qianhai, Hetao Shenzhen-HK Innovation Zone, Greater Bay Area, Lingang New Area. Genuine 15% CIT for qualifying encouraged industries.
Manufacturing supply chain depth
China remains the world’s manufacturing centre — 30%+ of global manufacturing output. End-to-end supply chains for electronics, EVs, batteries, solar, machinery, textiles. World’s largest lithium-ion battery producer. Strong supplier ecosystems in Shenzhen (electronics), Shanghai (advanced manufacturing), Suzhou, Dongguan.
Tech & AI ecosystem
World’s second-largest AI ecosystem. Major semiconductor capacity build-out underway. Leading positions in EVs (BYD, NIO, Xpeng), batteries (CATL), drones (DJI), telecoms (Huawei, ZTE). Substantial state-backed funding for AI, biotech, semiconductors, advanced manufacturing.
RCEP & Belt and Road
RCEP — the world’s largest free trade agreement (15 economies, ~30% of global GDP). Belt and Road Initiative covers 150+ countries. Recent visa-free entry expanded to 50+ countries. CEPA arrangements with Hong Kong and Macau provide additional structuring options.
Skilled, urbanised workforce
Annual STEM graduates exceed 5 million. Strong engineering, software, and manufacturing talent pools. Major urban clusters — Greater Beijing, Yangtze River Delta, Greater Bay Area, Chengdu-Chongqing. English widely used in international business but Mandarin is essential for substantive operations.
Digital payments & e-commerce infrastructure
WeChat Pay and Alipay are universal. World’s most advanced digital payments infrastructure. Major e-commerce platforms (Tmall, JD, Pinduoduo, Douyin) dominate consumer access. Cross-border e-commerce zones provide preferential routes for foreign brands selling into China.
Five legal structures — one usually fits.
For most foreign investors, the WFOE is the practical default. Representative Office is appropriate for market exploration where revenue generation is not required. Joint Ventures are less common since the Foreign Investment Law but remain useful where local-partner expertise is essential. Free Trade Zones offer the same structures with preferential tax treatment.
Wholly Foreign-Owned Enterprise
The standard structure for foreign investors. A Chinese limited liability company with 100% foreign capital. Three operational sub-types: Service WFOE, Manufacturing WFOE, and Trading WFOE (FICE). No statutory minimum capital but operational reality is RMB 100k–1m+ depending on activity and city. National treatment under FIL 2020.
Free Trade Zone WFOE
WFOE registered in a designated Free Trade Zone. 15% CIT for encouraged industries (Lingang New Area, Hainan FTP, Hetao Shenzhen-HK). Customs and FX preferential treatment. Streamlined approvals. Hainan FTP also caps individual income tax at 15% for qualifying employees — the most aggressive personnel package in China.
Service WFOE
Most common WFOE sub-type. Consulting, marketing, software, design, professional services. Lower capital expectations than trading or manufacturing. ATSE 15% rate available where the WFOE provides ITO/BPO/KPO services to overseas entities. Most early-stage SME entries use this structure.
Foreign-Invested Commercial Enterprise
WFOE authorised to engage in import-export, wholesale, retail, or commission agency. Requires import-export licence, customs registration, and SAFE registration for FX. Capital expectations typically higher (RMB 500k–2m). Critical for businesses bringing goods into China or sourcing from China for export.
Manufacturing WFOE
WFOE conducting production, assembly, or processing activities in China. Additional environmental impact assessment, land-use rights, fire safety, and sector-specific licensing required. Highest capital expectations (RMB 1m+). Common in Shenzhen, Suzhou, Dongguan, and Pearl River Delta manufacturing clusters.
Joint Venture
Partnership between foreign and Chinese investors. Less common since FIL 2020 abolished the mandatory JV structure for most sectors. Remains useful where a local partner’s licences, distribution, or regulatory positioning are genuinely essential (some media, energy, finance, healthcare sub-sectors).
Representative Office
Liaison office of a foreign company. Limited to market research, business promotion, and liaison activity. Cannot generate revenue or sign contracts on the parent’s behalf. Taxed on a deemed-profit basis on operational expenses. Useful for market exploration before WFOE commitment.
Foreign-Invested Partnership
Partnership between foreign investors, or between foreign and Chinese investors. Tax-transparent. Less common than WFOE. Used in specific VC fund, professional services, and consulting contexts. No statutory minimum capital. More flexible governance than a WFOE.
Talk to us first
WFOE for 90% of cases. RO for early market exploration. JV only where a local partner adds genuine commercial value. FTZ registration where the 15% CIT regime applies. SLPE small-business CIT scoping deserves day-one attention.
Book a call →From decision to live entity.
The end-to-end registration sequence for a Chinese WFOE — coordinated by Grant & Graham’s Shanghai office and senior Chinese legal, tax and accounting counsel. Service WFOE in Shanghai: 10 to 16 weeks. Trading or Manufacturing WFOE: longer.
Structure, location & business scope
WFOE sub-type (Service, Trading, Manufacturing), city (Shanghai, Beijing, Shenzhen, Guangzhou, FTZ), and the specific business scope (经营范围) approved by SAMR. The business scope determines what you can do — broader scopes need more pre-approvals. FTZ registration is a separate decision worth scoping early for tax regime access.
Negative List & pre-approval check
Verify the proposed business activity against the 2024 Foreign Investment Negative List. Activities on the list are either prohibited or restricted (joint venture / approval required). Activities off the list use the standard WFOE process. Some sectors (financial services, telecoms, media, education, healthcare) require sector-specific pre-approval from MOFCOM, CBIRC, MIIT, or other regulators.
Company name reservation
Reserve the Chinese name with SAMR. The Chinese name follows a strict format: Administrative Region + Trade Name + Industry + Organisation Type (e.g., 上海...咨询有限公司). Submit 2–3 alternatives. Approval typically 1–2 weeks. Foreign-language name is secondary — the Chinese name is the legal identity.
SAMR →Articles of Association & lease
Draft Articles of Association (公司章程) under the revised 2024 Company Law. Define registered capital, shareholders, business scope, governance, manager appointment, signatory authority. Lease agreement for the registered office is required at registration — the address must match the SAMR record. Virtual addresses are not permitted in most cities.
SAMR registration & Business Licence
Submit the WFOE incorporation file to SAMR. Business Licence (营业执照) issued on approval. The Business Licence carries the Unified Social Credit Code (统一社会信用代码) — the company’s 18-digit identity that replaces the historical multiple registration numbers. Typical timeline 2–3 weeks from complete filing.
Company seals (chops) registration
Register the company seals (公章, 财务章, 法人章, 发票章, 合同章) with the Public Security Bureau. Chinese company seals are legally binding on contracts — arguably more important than signatures in PRC practice. Multiple seals issued: company seal (most important), finance seal, legal representative seal, invoice (fapiao) seal, and contract seal.
Tax registration & e-fapiao setup
Register with the State Taxation Administration. Determine VAT status (general or small-scale taxpayer). Register for e-fapiao (electronic invoicing) under Golden Tax Phase IV digitalisation. Set up the Golden Tax system for VAT compliance. SLPE and HNTE positioning scoped at this stage where applicable.
STA →Bank account & SAFE FX registration
Open the basic RMB account (基本账户) at a Chinese bank. Open the capital injection account in foreign currency for the initial capital wire-in. Register with SAFE (State Administration of Foreign Exchange) to enable cross-border FX flows. Capital must be wired in by overseas shareholder and converted to RMB through the capital account. Banks typically Bank of China, ICBC, CCB, HSBC China, Standard Chartered China.
Social insurance & housing fund
Register with the local Social Insurance Bureau (社保) and Housing Fund Bureau (公积金). Mandatory before hiring any local employees. The "5 insurances + 1 fund" (五险一金): pension, medical, unemployment, work injury, maternity, plus housing fund. Total employer contribution in Shanghai is typically 28–35% of gross salary. Foreign employees may be exempt under certain treaties.
MOHRSS →Sector licences & ongoing compliance
Sector-specific licensing as required (food safety, medical devices, education, finance, telecoms). Ongoing: monthly VAT filings, quarterly CIT provisional filings, annual CIT return within 5 months of fiscal year-end. Mandatory annual audit by a Chinese-licensed CPA firm. Annual MOFCOM and SAMR Joint Annual Report. PIPL/DSL/Cybersecurity Law data compliance scoped per business activity.
Now in Shanghai.
Grant & Graham opened its Shanghai office in 2026 — our first physical presence in Mainland China.
China is the most complex jurisdiction we operate in. Remote coordination through email and time-zone-shifted calls does not work for a market where regulators, banks, and counterparties expect in-person engagement. For clients entering or scaling in Greater China, our Shanghai team coordinates the full lifecycle on the ground — with senior local legal, tax and accounting counsel inside the building.
G&G Shanghai
- WFOE / RO / JV formation, SAMR registration
- Free Trade Zone selection (Lingang, Hainan, Qianhai)
- HNTE / ATSE / SLPE tax-regime scoping
- Tax, SAFE FX, and bank account onboarding
- PIPL / DSL / Cybersecurity Law compliance scoping
- Cross-border data, IP, and capital structuring
- Interim CEO / GM / CFO placements in China
- Greater Bay Area & Hong Kong coordination
What it costs to incorporate & run.
All figures are indicative for a standard Service WFOE in Shanghai with one foreign shareholder. China sits at the higher end of formation costs globally — reflecting the genuine regulatory complexity. Trading and Manufacturing WFOEs add meaningful uplift. Free Trade Zone registration unlocks substantial tax savings but adds complexity.
One-time setup
Trading WFOE adds approximately €3,000–€6,000 (import-export, customs, FX licensing). Manufacturing WFOE adds €5,000–€15,000+ (EIA, land-use rights, fire safety, sector licences). FTZ registration adds modest cost but unlocks the 15% CIT regime where applicable.
Ongoing monthly / annual
Annual statutory audit by a Chinese-licensed CPA firm is mandatory for all WFOEs. Joint Annual Report (年报) due by June 30 each year. PIPL/DSL/Cybersecurity Law compliance adds cost for data-intensive businesses but is essential. Transfer pricing documentation required for related-party transactions.
Get an estimate in 30 seconds.
Three quick questions. We will give you a realistic cost range and timeline for your situation, and route the answers straight into a fixed-price quote request.
Which company structure are you considering?
How is the shareholding structured?
What do you need from us?
The legal framework to know.
A summary of the core legislation governing companies in China — substantive work is delivered through our Shanghai office and senior Chinese counsel.
Corporate Law
- Company Law of the PRC (revised 2024)
- Foreign Investment Law (2020)
- Negative List for Foreign Investment (2024)
Tax Law
- Enterprise Income Tax Law (EIT)
- VAT Law (2026 codification)
- Individual Income Tax Law
- Tax Collection & Administration Law
Employment Law
- Labour Law of the PRC
- Labour Contract Law
- Social Insurance Law
- Work Safety Law
Data & Cyber
- Cybersecurity Law (2017)
- Personal Information Protection Law (PIPL, 2021)
- Data Security Law (DSL, 2021)
- Cross-border data transfer regulations
Foreign Exchange & FTZ
- SAFE Foreign Exchange Regulations
- Free Trade Zone framework regulations
- Hainan Free Trade Port Law (2021)
Intellectual Property
- Trademark Law of the PRC
- Patent Law of the PRC
- Copyright Law of the PRC
- Anti-Unfair Competition Law
China, answered.
Four steps from enquiry to live entity.
Discovery call
30-minute conversation to understand your business, sector, China nexus, structure preference, FTZ relevance, HNTE/SLPE eligibility, and PIPL/DSL exposure. Honest assessment of fit.
Recommendation
Senior advisory on the right structure (WFOE type, RO, JV), city, FTZ selection, business scope, tax-regime positioning, registered capital, and banking partner. Fixed quote in EUR or RMB.
End-to-end formation
SAMR registration, business scope, lease, Articles, seals, tax registration, SAFE FX setup, bank account, social insurance, housing fund, sector licences. Shanghai-coordinated.
Ongoing support
Retained accounting, monthly VAT, quarterly CIT, payroll, social insurance, annual audit, CIT return, Joint Annual Report, transfer pricing, PIPL/DSL compliance, structural changes as you scale.
Ready to incorporate in China?
Tell us in 25 minutes what you need. Our Shanghai office will tell you honestly whether China is the right fit for your business — WFOE, RO, or JV — and if it is, we’ll handle the setup end-to-end on the ground.