Expanding into China remains a strategic priority for many global companies, including Indian startups, mid-sized enterprises, and multinational corporations. With its massive consumer base, advanced manufacturing ecosystem, and position as a global trade hub, China offers undeniable opportunities. However, registering a business in China is also one of the most complex market-entry processes in the world.

This guide is designed to help HR leaders, CFOs, and founders understand how to open a company in China, the true cost of company registration in China, compliance obligations under Labour Law in China, and most importantly whether registering a company is even the right choice compared to using EOR services in China.

Rather than just listing steps, this blog provides a strategic framework to help you choose between company registration vs Employer of Record (EOR) in China, based on cost, speed, risk, and hiring plans.

Why Global Companies Want to Enter the Chinese Market

China is not just another international market it is an ecosystem with its own regulatory logic, business culture, and employment framework.

For global companies, China represents:

• One of the largest consumer markets globally
  
• A strategic manufacturing and sourcing hub
  
• A fast-growing innovation ecosystem spanning EVs, AI, electronics, and life sciences
  

At the same time, China’s regulatory environment is highly localized. Rules can vary significantly across provinces and cities, making company registration in China far more complex than in most countries. For many foreign businesses, especially those in early expansion stages, the challenge is not opportunity it is how to enter China without overexposing the business to legal and compliance risk.

Business Structures You Can Choose From

China offers several business entity types for foreign investors, each with different requirements for capital, liability, and compliance:

• Wholly Foreign-Owned Enterprise (WFOE) – Fully foreign-owned, offering operational control and profit repatriation.
  
• Joint Venture (JV) – Shared ownership between foreign and Chinese partners; required in some restricted industries.
  
• Representative Office (RO) – For market research and liaison purposes; cannot generate revenue.
  
• Foreign-Invested Partnership (FIP) – Flexible structure with shared liability; suitable for service or consulting firms.
  
• Branch Office – Extension of a foreign company with limited scope and parent company liability.
  

Comparing Business Structure Options

How to Choose the Right Business Model for Your Operations

The right structure depends on your goals, liability tolerance, and industry:

• WFOEs are best for companies seeking complete control, profit repatriation, and long-term market presence.
  
• JVs are necessary for industries where full foreign ownership is restricted, like telecom or media.
  
• Representative offices are ideal for early market research or partner coordination without commercial activity.
  
• EOR solutions are best for testing the market, short-term hiring, or building small teams quickly.
  

Step-by-Step Process to Register a Business in China

Registering a company in China is not a single-step process. It involves multiple government authorities and approvals, often at both central and local levels.

Name Reservation and Business Scope Approval

Company names must be approved by Chinese authorities and must align precisely with the approved business scope. Business scope definitions are critical—any deviation can result in penalties or operational restrictions later.

MOFCOM and SAMR Registration

Foreign investment filings are submitted to:

• Ministry of Commerce (MOFCOM)
  
• State Administration for Market Regulation (SAMR)
  

Documentation requirements are extensive and often require notarization, legalization, and translation.

Business License, Company Seals, and Bank Accounts

Once approved:

• A business license is issued
  
• Official company seals (“chops”) are created
  
• Local bank accounts are opened
  

Company seals hold legal authority in China—mismanagement can create serious governance risks.

Tax Registration and Social Security Setup

After registration:

• VAT and corporate tax registration is mandatory
  
• Social security and housing fund accounts must be set up
  

Payroll compliance under Labour Law in China begins immediately

Suggested Read: Understanding Labour Laws in China: Contracts, and Termination Rules

Key Documents Required to Register Your Chinese Company

• Passports of all foreign shareholders and directors
  
• Proof of residential address for shareholders and directors
  
• Articles of Association and incorporation forms
  
• Lease agreement for the registered office in China
  
• Company name pre-approval from SAMR
  
• Bank reference letter for foreign investors
  
• UBO (Ultimate Beneficial Owner) declaration for compliance
  

Post-Incorporation Essentials You Shouldn’t Ignore in China

After incorporation, ongoing compliance is crucial for smooth operations:

• File monthly and quarterly tax returns with the State Taxation Administration
  
• Maintain proper accounting and annual audit reports
  
• Comply with labor laws, payroll tax, and social security contributions
  
• Update and maintain company chops (official seals) for all transactions
  
• Submit annual filings to SAMR to remain in good standing
  

Additional Business Licenses and Registrations You Might Need in China

Certain sectors require additional permits or registrations:

• E-commerce and internet business licenses
  
• Food, pharmaceutical, or medical device approvals
  
• Import/export licenses and customs registration
  
• Environmental and safety permits for manufacturing operations
  

Timeframe to Set Up a Business in China

Complex approvals or foreign document authentication can extend timelines.

What Does It Cost to Incorporate a Company in China?

The cost varies depending on the entity type and industry:

• Government registration and license fees: $300–$800
  
• Notary, legal, and translation services: $1,000–$3,000
  
• Office lease (mandatory for WFOE and JV) varies by city
  
• Accounting and compliance services: $1,500–$4,000 annually
  
• Additional licenses or sector approvals may add extra costs
  

Overall, initial setup typically ranges from $3,000 to $8,000 excluding capital investment.

Obstacles Global Founders May Face While Setting Up in China

• Complex regulatory environment with multiple government approvals
  
• Mandatory use of company seals for official transactions
  
• Capital injection and foreign exchange restrictions for WFOEs
  
• Industry-specific foreign ownership limitations
  
• Language barriers and requirement for notarized and translated documents
  

Incorporating as a Foreign-Owned Company: A Special Path

Foreign investors can operate in China through different routes:

• Wholly Foreign-Owned Enterprise (WFOE) – Full control and profit repatriation
  
• Joint Venture (JV) – Required for certain restricted industries
  
• Representative Office (RO) – No revenue generation but useful for liaison or research
  

Most industries now allow 100% foreign ownership under the Foreign Investment Law, but sensitive sectors like media, telecom, and education have restrictions and may require government approval.

Employer of Record: A Simpler Way to Hire in China Without Incorporation

Entering the Chinese market does not always require establishing a legal entity. For many global companies, especially those exploring market potential or running pilot projects, an Employer of Record (EOR) offers a fast and fully compliant way to hire employees in China without the cost and time involved in incorporation.

From a legal standpoint, the EOR is the official employer for your Chinese workforce. It manages employment contracts, payroll processing, social insurance, housing fund contributions, and tax withholdings according to Chinese labor regulations. Meanwhile, your company retains complete control over employees’ daily responsibilities, workflows, and performance management.

This model is ideal for:

• Testing the Chinese market before committing to a Wholly Foreign-Owned Enterprise (WFOE)
• Running short-term or project-based teams in sales, sourcing, or operations
• Hiring remote Chinese employees to support global functions like development or customer service
• Rapidly expanding into Asia without navigating complex company formation processes

Using an EOR also shields foreign businesses from administrative and compliance challenges such as:

• Drafting labor contracts in line with Chinese employment law
• Registering for mandatory social insurance and housing funds
• Managing payroll tax filings and fapiao (invoice) compliance
• Providing statutory employee benefits including paid leave, pensions, and health insurance

By leveraging an EOR, businesses reduce risks associated with non-compliance, worker misclassification, and labor disputes, while achieving quick, cost-efficient market entry.

Suggested Read: Employer of Record China: A Comprehensive Guide

Why Asanify is the Ideal Partner for Global Companies Entering China

Asanify provides complete support for global businesses entering China, offering both full company incorporation and Employer of Record (EOR) services. For companies with long-term growth plans, we guide you through the full registration process:

• Choosing the right entity type (WFOE, Joint Venture, or Representative Office)
• Drafting and notarizing Articles of Association and incorporation documents
• Registering with the State Administration for Market Regulation (SAMR)
• Obtaining tax registration and setting up local bank accounts
• Managing post-incorporation compliance, payroll, and statutory reporting

If you are not ready to establish a legal entity, our EOR solution allows you to hire employees in China within just a few days. Asanify handles all employment contracts, processing payroll, social insurance, housing fund contributions, and compliance requirements, ensuring your team operates legally without administrative burdens.

Asanify has successfully helped clients across Asia, Europe, the US, and the Middle East enter the Chinese market quickly and without risk. Whether you are a startup testing product-market fit or a multinational deploying a regional team, we make your China expansion smooth and fully compliant.

Summary & Final Takeaways

China in 2025 offers massive opportunities for global companies, but choosing the right market entry strategy is crucial. Businesses generally have two main options: incorporating a local entity like a WFOE or Joint Venture or hiring through an Employer of Record (EOR).

If your goal is to establish a long-term footprint, gain full operational control, and repatriate profits, setting up a registered Chinese entity is the right choice. Conversely, if your focus is rapid market entry, testing operations, or creating a small local team without the complexities of incorporation, an EOR allows you to start quickly while staying fully compliant with Chinese labor and tax regulations.

FAQs

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant  or Labour Law  expert for specific guidance.