Starting your own business in China–some additional comments.

If you are looking to register your own business in China, I would suggest that you read this on the China Success Stories website. It’s a great list of must do’s. I would add a couple of other items to the list that if you’re not prepared for will get you hung up.

Here’s the article from China Success Stories.

Now for the additions.

1. You must have all the correct documentation for the business name, foreign capital (if any), and members/owners/reps/legal person in China done and approved buy the Chinese Embassy in your home country BEFORE you can start this process. This time consuming and almost completely mail-only process can be both frustrating (hard to talk with people in the embassy) and time consuming (yes, I said time consuming twice–and I meant it both times). It also can cost up to $100 per document to have the embassy certify.

2. An additional few days could be spent getting your health certification for foreign employees. This requires an eye test in one government office, a complete physical exam in a (scary) government clinic and at least two visits to your local police department for residence verification.

3. Just because you have been told by one office that you need to get X document from whatever other department does not mean that that next department will have it, or that they will give it to you or that they won’t want some other form from some other department first. This is not just me being crotchety either. In our SZ business registration we traveled back and forth between government offices trying to figure out who really could do what was next on our “list” of required documents. Many times we were told by one clerk that we must have this and then left only to hear something similar from a different clerk in a different department. Try to find a senior official in each place. They will know what really can and can’t be done and even if they don’t take care of your paperwork, you can throw their name out to the window clerks to get things done right.

4. One advantage of hiring someone to do this process for you (see below) is that they will know what papers can be filed first, at the same time and which offices really do process stuff in a single day.

5. Legally, you have to hire employees from the State. But if you have “employees” that you already know/work with/want to hire you can work with an accounting firm on your employee taxes and they can “work out” the conflict of this law. Even according to the lawyers that I’ve talked with, this is a little bit of a gray area. But the contracts for employees and taxes are with the state and they are the ones allowing this end-round process via accounting companies.

6. Once your business is registered, you’ll of course have to find a place to do business and, unlike the US, you can’t have a home business unless your building is specifically registered as “multipurpose” facility. Check out your building’s code/zoning before you start the registration process. You could have your license rejected if you provide an address that is not approved for business.

7. You DO not have to pay anything “extra” to officials in offices nor do you need guanxi to get this process done. But I’ll make one warning and one suggestion about what “really” happens on the ground. First the suggestion.

a. Pay $1000USD and have someone else do all the paper work for you. It will save you tons of frustration. You can be involved as much as you want (follow them to each office for each document) if you don’t trust them. But there are a lot of good accounting/law firms that will help you register, annually update registrations, pay employee and other taxes and take a huge load off your mind for a very reasonable price.

b. Even though you don’t pay fees in the government offices, you most likely will have someone come out to your office. There are a number of government departments that need to come to your office after/while the registration is completed (fire safety, employee verification, zoning confirmation, or foreign employee registration—all of which were needed in Shenzhen). You’ll have to choose whether you are willing to pay these people or not. I’ve found that if you don’t they just won’t show up. And, a little bird told me that just one of these guys can cost you more than all the legal fees and hiring an accountant put together–and that’s if you haggle with him for 2 months and cut the “fee” in half!!

Good luck.

2 Responses to “Starting your own business in China–some additional comments.”

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