Is it compliant to send commercial information to users?

Commercial information refers to information that introduces or promotes goods, services, or business investment opportunities, and its forms include text, phone calls, voice, images, videos, etc.

In China, sending commercial information requires users' prior consent. Meanwhile, the platform should clearly indicate the identity and contact details of its operator, and provide users with a conspicuous, simple, and free way to refuse receipt of such information. 

If a user explicitly indicates refusal of commercial information, such information sending must be stopped immediately.

Any compliance requirements for commercial promotion of goods/services on platforms?

The most important thing is 'being real'! Platform operators or store operators on an e-commerce platform are not allowed to engage in the following activities:

❌ Fabricating the credentials, qualifications, or honors of the operator.

❌ Fabricating product or service transaction information, business data (such as clicks, followers, likes, etc.)

❌ Tampering with, fabricating, or concealing users’ reviews.

❌ Prioritizing positive reviews, demoting negative reviews, or not clearly distinguishing reviews of different products or services through misleading displays.

❌ Deceptive marketing in the ways like falsely claiming in-stock items, fabricating reservations, or faking rush purchases.

❌ Other false or misleading promotions.

Is bundled sales allowed?

It is allowed! Just keep in mind the following points:

❓Whether directly bundling two or more goods/services for sale, or offering multiple options to sell goods/services to consumers, it is necessary to prominently remind consumers of the bundled sale.

❌ When offering multiple options, it is forbidden to set any options for bundled goods or services as the default option of the consumer.

❌ The bundled option selected by a consumer in his previous transaction shall not be set as the default option in a subsequent independent transaction.

Any compliance requirements regarding the protection of user rights for online services?

💰The prices should be fair and clearly marked! The platform is obligated to inform users of service information in advance, clearly indicating product features, rights, fees, etc.

💻The platform must not use algorithms to implement unreasonable differential treatment in transaction prices or other transaction conditions based on consumers' age, occupation, consumption preferences, transaction habits, or other characteristics. Such discrimination is illegal.

🆕If there are additional conditions such as registering memberships or extra payment, the platform should prominently notify users.

❌Without informing users in advance, the platform must not arbitrarily add restrictive conditions (for example, only VIP members can read the subsequent chapters) during the provision of product services and take this as a reason to terminate users' normal use of product/services or reduce service experience.

😄Regarding auto-renewal or automatic extension, the platform must obtain users' consent, allowing them to choose whether to activate such functions——such functions must not be pre-selected or forcibly bundled.

📱Five days before auto-renewal or automatic extension, the platform should prominently remind users via SMS, push notifications, or other noticeable ways, letting them choose whether they want to renew the service in this way.

❌During the service period, the platform must provide consumers with prominent and convenient options to cancel or change auto-renewal or automatic extension services at any time and must not charge unreasonable fees.

Is it compliant to send commercial information to users?

Commercial information refers to information that introduces or promotes goods, services, or business investment opportunities, and its forms include text, phone calls, voice, images, videos, etc.

In China, sending commercial information requires users' prior consent. Meanwhile, the platform should clearly indicate the identity and contact details of its operator, and provide users with a conspicuous, simple, and free way to refuse receipt of such information. 

If a user explicitly indicates refusal of commercial information, such information sending must be stopped immediately.

Any compliance requirements for commercial promotion of goods/services on platforms?

The most important thing is 'being real'! Platform operators or store operators on an e-commerce platform are not allowed to engage in the following activities:

❌ Fabricating the credentials, qualifications, or honors of the operator.

❌ Fabricating product or service transaction information, business data (such as clicks, followers, likes, etc.)

❌ Tampering with, fabricating, or concealing users’ reviews.

❌ Prioritizing positive reviews, demoting negative reviews, or not clearly distinguishing reviews of different products or services through misleading displays.

❌ Deceptive marketing in the ways like falsely claiming in-stock items, fabricating reservations, or faking rush purchases.

❌ Other false or misleading promotions.

Is bundled sales allowed?

It is allowed! Just keep in mind the following points:

❓Whether directly bundling two or more goods/services for sale, or offering multiple options to sell goods/services to consumers, it is necessary to prominently remind consumers of the bundled sale.

❌ When offering multiple options, it is forbidden to set any options for bundled goods or services as the default option of the consumer.

❌ The bundled option selected by a consumer in his previous transaction shall not be set as the default option in a subsequent independent transaction.

Any compliance requirements regarding the protection of user rights for online services?

💰The prices should be fair and clearly marked! The platform is obligated to inform users of service information in advance, clearly indicating product features, rights, fees, etc.

💻The platform must not use algorithms to implement unreasonable differential treatment in transaction prices or other transaction conditions based on consumers' age, occupation, consumption preferences, transaction habits, or other characteristics. Such discrimination is illegal.

🆕If there are additional conditions such as registering memberships or extra payment, the platform should prominently notify users.

❌Without informing users in advance, the platform must not arbitrarily add restrictive conditions (for example, only VIP members can read the subsequent chapters) during the provision of product services and take this as a reason to terminate users' normal use of product/services or reduce service experience.

😄Regarding auto-renewal or automatic extension, the platform must obtain users' consent, allowing them to choose whether to activate such functions——such functions must not be pre-selected or forcibly bundled.

📱Five days before auto-renewal or automatic extension, the platform should prominently remind users via SMS, push notifications, or other noticeable ways, letting them choose whether they want to renew the service in this way.

❌During the service period, the platform must provide consumers with prominent and convenient options to cancel or change auto-renewal or automatic extension services at any time and must not charge unreasonable fees.

3️⃣Tax Incentive Policies for Foreign Resident Individuals

✊Income earned by resident individuals^(1) from within and outside China is subject to individual income tax.

>1. A resident individual refers to a person who has a domicile within China, or who does not have a domicile but has resided in China for a total of 183 days or more within a single tax year.

Foreigners qualifying as resident individuals have the option to enjoy one of the two preferential policies below (temporarily in effect until December 31, 2027):

➡️Housing allowances, language training fees, children's education fees, and other subsidies are exempt from paying individual income tax.

➡️Apply general policies of individual income tax special additional deduction in China (Expenditures for children's education, house renting, supporting parents, etc., are deductible from comprehensive taxable income)

4️⃣Tax Incentive Policies for Foreign Non-resident Individuals

💰Non-resident individuals^(2) are subject to individual income tax only on income derived from within China.

>2. A non-resident individual refers to a person who has no domicile in China and does not reside there, or a person who has no domicile and resides in China for less than 183 days in a single tax year.

💰An individual with no domicile in China who resides in China for a total of 183 days in a year for less than six consecutive years, upon filing with the competent tax authority, is exempt from paying individual income tax on his income derived from outside China and paid by foreign entities or individuals.

🏠Foreign individuals receiving dividends from FIEs are exempt from individual income tax.

1️⃣Basic Tax Policies for FIEs

The basic corporate income tax rate is 25%.

Eligible small and low-profit enterprises^(1) are entitled to the preferential policies outlined in the table below:

Annual taxable income	Actual tax rate	Example
No more than 1 million CNY	5%	Assuming a minimum profit of RMB 100,000, the corporate income tax would be: 100,000 × 5% = RMB 5,000 per year.
Over 1 million CNY and no more than 3 million CNY	10%

>

1. Eligible small and low-profit enterprises means the enterprises of which:
   ❌Annual taxable income is no more than 3 million CNY
   ❌Number of employees is no more than 300
   ❌Value of total assets is no more than 50 million CNY

⚠️ NB

➡️For non-resident enterprises that do not have institutions or places of business within China, or have institutions or premises but have no actual connections, dividends received shall be subject to corporate income tax at a rate of 10% (the statutory tax rate is 20%, yet the actual applicable rate is 10%).

➡️For a non-resident enterprise^(2) with an institution or place of business in China, the dividends, bonuses, and other equity investment income it receives from a resident enterprise^(3)—to the extent that such income is effectively connected with that establishment or place of business—shall be treated as tax-exempt income.

>2. Non-resident enterprises refer to enterprises that are established in accordance with foreign (regional) laws and whose actual management organizations are not located within China, but have established institutions or premises within China, or have not established institutions or premises within China but has income sourced from China.

>3. Resident enterprises refer to enterprises that are legally established within China, or established according to the laws of foreign countries (regions) but whose actual management organizations are located within China. FIEs are generally resident enterprises.

2️⃣Exclusive Preferential Tax Policy for FIEs in Specific Industries

✅Preferential Policies for Key Industries in the Lin-Gang Special Area of Shanghai FTZ

FIEs in industries such as integrated circuits, artificial intelligence, biomedicine, and civil aviation are entitled to a preferential corporate income tax rate of 15% (instead of the statutory rate 25%) for a five-year period from the date of establishment.

✅Preferential Policies for Encouraged Industries

An FIE in an industry encouraged by the government shall be exempt from customs duties on imported production equipment for its own use, and shall be entitled to a 100% additional deduction on its R&D expenses (to the extent that no intangible asset is formed) when computing its taxable income.

✅Preferential Policies for Reinvestment of Overseas Profits (2025-2028)

When overseas shareholders reinvest the profit of domestic FIEs, the profits used for reinvestment will be temporarily exempt from corporate income tax, and 10% of the reinvestment amount may be credited against corporate income tax.

Pursuant to the People’s Republic of China Labor Contract Law and relevant judicial interpretations, when formulating internal rules and regulations that directly affect employees’ material interests, employers are legally required to fulfill a democratic procedure, which includes the following steps:

• The draft rules must be submitted to the employees’ congress or all employees for discussion;
• Employees have the right to submit proposals and comments;
• The employer must engage in equal consultation with the Labor Union or employee representatives to finalize the rules;
• The employer must publicly disclose or otherwise notify all employees of the finalized rules and major decisions affecting their material interests.

However, what should a newly established FIE do if it has not yet established a labor union❓

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Practical Steps for Small FIEs Without a Labor Union

Step1️⃣

Distribute the draft rules to all employees via email, the company’s internal OA system, WeChat group (or other widely used instant messaging platforms).

Step2️⃣

Simultaneously with distribution, require employees to submit feedback within a specified timeframe in a designated method (e.g., replying to a dedicated HR email address, completing and submitting a “Feedback Form” to an assigned HR representative, etc.).

🚩Clearly state that failure to respond by the deadline will be deemed as consent to the proposed rules.

Step3️⃣

• If employee comments or objections are reasonable and feasible, revise the draft accordingly;
• If not, provide a timely response explaining the decision of the employer.
  • Crucially: If any provision in the draft violates PRC labor laws or regulations, the employer must accept the objection and amend the clause;
  • If the provision is lawful, the employer may lawfully reject the comments or objections.

Step4️⃣

Publish the final version of the rules to all employees through the same channels in Step1️⃣.

⭐️Key Compliance Notes

The company must retain complete and long-term records of the entire consultation process, including：

• Notices soliciting feedback
• Employee responses and comments
• Evidence of final publication

If HR or management of the company communicates with employees via instant messaging platforms (e.g., WeChat), they should secure and preserve these digital records using reliable methods such as trusted timestamping or digital signatures to ensure admissibility in potential labor disputes.

Step3️⃣ Conduct Product and Operational Verification

Key verification items

Authenticity of the supplier’s promotional claims and the professional competence of its sales team.

Practical tips

• If you possess professional product knowledge, conduct online inquiries regarding technical issues with the supplier’s sales staff. This is an effective way to validate the authenticity of their product promotions and assess the team’s overall professionalism. To a certain extent, it also helps identify individuals who use the name of a legitimate enterprise to commit fraud.
• Check the domain registration date of the supplier’s official website. A major discrepancy, such as a claimed 10-year operating history paired with a newly registered domain (only months old) , requires further investigation.
• Locate your target products on the supplier’s official website, then cross-reference pricing and product reviews on major Chinese B2B platforms like Alibaba 1688, JD Industrial, Baidu Aicaigou and Made-in-China. Any quote drastically inconsistent with prevailing market prices should be treated with caution (an abnormally low quote may indicate fraud or shoddy work).
• For any certificates or licenses advertised by the supplier, verify their authenticity and valid term (expiration dates) directly with the issuing authorities.
• For low-value goods, raw materials and spare parts, requesting product samples for testing is highly recommended.
• If the supplier claims to be a manufacturer, schedule a video inspection of its production site, with focus on the following key areas:

>

Step4️⃣ Public Information Analysis

Key verification items

Suppliers' “soft risks” exposed by public information, e,g., complaints on product quality/service, occasional internal information leaks from workers, disputes publicly disclosed by partners, major negative news reports (such as regulatory penalties, security incidents, data breaches, etc.)

Practical tips

• Once you have ruled out the supplier's “hard risks” (such as risks of solvency and delivery capacity) and begin to assess its "soft risks", at least it can be considered unlikely to engage in fraud or deceptive behavior against you.
• The presence of soft risks indicates that the supplier is not an easy partner to work with, and you need to pay attention to all aspects such as contract stipulations, daily communication, goods inspection, and payment arrangements. A well-drafted contract and traceable records in daily communication are very important to your cooperation.
• Some workers who have unpleasant experiences with the company often disclose the company's actual situation online, which may involve product quality, corporate culture, or even illegal activities.
• The publicly available information obtained from the following sources in China is more comprehensive and accurate.

>

Step3️⃣ Conduct Product and Operational Verification

Key verification items

Authenticity of the supplier’s promotional claims and the professional competence of its sales team.

Practical tips

• If you possess professional product knowledge, conduct online technical inquiries with the supplier’s sales staff. This is an effective way to validate the authenticity of their product promotions and assess the team’s overall professionalism.
• Check the domain registration date of the supplier’s official website. A major discrepancy, such as a claimed 10-year operating history paired with a newly registered domain (only months old) , requires further investigation.
• Locate your target products on the supplier’s official website, then cross-reference pricing and product reviews on major Chinese B2B platforms like Alibaba 1688, JD Industrial, Baidu Aicaigou and Made-in-China. Any quote drastically inconsistent with prevailing market prices should be treated with caution (an abnormally low quote may indicate fraud or shoddy work).
• For any certificates or licenses advertised by the supplier, verify their authenticity and valid term (expiration dates) directly with the issuing authorities.
• For low-value goods, raw materials and spare parts, requesting product samples for testing is highly recommended.
• If the supplier claims to be a manufacturer, schedule a video inspection of its production site, with focus on the following key areas:

>Raw material warehouse: to verify whether materials are properly zoned, clearly labeled and neatly stacked in order
Defective product storage area: though rarely shown voluntarily, this area best reflects the company’s quality control standards
Production dashboard: to check for updated daily and future production plans, consistent date records, and clear display of production targets and progress
Assembly line staff status: to see how old the workers’ are, their mental state, use of protective equipment and their operational proficiency
On-site living facilities (if possible): the management level of factory restrooms, canteens and dormitories serves as a reliable indicator of the enterprise’s overall operational and management capabilities

Step4️⃣ Public Information Analysis

Key verification items

Suppliers' “soft risks” exposed by public information, e,g., complaints on product quality/service, occasional internal information leaks from workers, disputes publicly disclosed by partners, major negative news reports (such as regulatory penalties, security incidents, data breaches, etc.)

Practical tips

• Once you have ruled out the supplier's “hard risks” (such as risks of solvency and delivery capacity) and begin to assess its "soft risks", at least it can be considered unlikely to engage in fraud or deceptive behavior against you.
• The presence of soft risks indicates that the supplier is not an easy partner to work with, and you need to pay attention to all aspects such as contract stipulations, daily communication, goods inspection, and payment arrangements. A well-drafted contract and traceable records in daily communication are very important to your cooperation.
• Some workers who have unpleasant experiences with the company often disclose the company's actual situation online, which may involve product quality, corporate culture, or even illegal activities.
• The publicly available information obtained from the following sources in China is more comprehensive and accurate.

>News media: Rednote, WeChat Search, Weibo and some industry-specific medias.
Social and complaint platforms: Black Cat Complaints, 12315 Platform, Zhihu, and industry-specific forums.
Recruitment platforms: Kanzhun, Maimai, Liepin, etc.

Supplier background checks are a standard business practice in China. As a practicing lawyer, I regularly oversee large-scale supplier due diligence projects that require comprehensive risk assessment, verifying basic corporate information, litigation history, operational capacity, financial solvency, market credibility, and sometimes reviewing compliance issues.

For simple, low-risk procurement scenarios, full-scale due diligence is not always cost-effective. You can complete reliable preliminary background checks through accessible online resources^(1).

>1. ONLINE PLATFORMS
🎩official platforms, such as the National Enterprise Credit Information Publicity System and the Judgment Enforcement Information Disclosure Platform
💻mainstream commercial verification platforms, say, Qichacha, Tianyancha, Aiqicha, etc.
🚩All the information mentioned in the following Tips can be found on these platforms. However, the information isn’t always 100% accurate, so sometimes cross-checking is needed.

Step1️⃣ Verify Basic Corporate Information

Key verification items

Official company name, legal representative, shareholders and ultimate beneficial owners, registered address, registered capital, establishment date, core business scope, and any historical changes to the above information.

Practical tips

• A short operating history (less than 3 years) and frequent core business adjustments of a supplier typically signal operational instability. This does not necessarily mean the company is untrustworthy or unfit for cooperation, but it merits further targeted verification.
• It is common in China for a company’s shareholders, legal representative or actual controller to hold stakes in multiple enterprises. However, if most of their affiliated companies have been dissolved or had their business licenses revoked, you must exercise extreme caution. Such a track record may indicate the controller habitually deregisters old companies and establishes new ones to evade after-sales and contractual liabilities.
• If multiple seemingly unrelated enterprises are registered under the same address as your target supplier, the location is likely a centralized virtual registration address. This means the supplier may lack an actual on-site operation or physical office. For self-claimed manufacturers, their production may occur in small, unregulated family workshops. While this does not equate to inferior product quality, on-site or remote video verification is essential.
• Status of registered capital requires case-by-case evaluation. A disproportionately high registered capital with zero actual paid-in capital usually suggests the company is inflating its operational scale and financial strength. For this type of enterprises, we recommend cooperating with them cautiously, as their liquidity and solvency may collapse at any time.
• A social security contribution headcount of zero indicates the supplier has no formal full-time employees. It may operate entirely via outsourcing, or even function as a shell company with no independent production facilities.

Step2️⃣ Check Litigation and Enforcement Records

Key verification items

The company’s litigation and arbitration history, litigation records of its affiliated shareholders, legal representative and actual controller, and all court enforcement records targeting the company and its key affiliated individuals.

Practical tips

• Ordinary litigation or arbitration cases are commonplace for operating enterprises. Nevertheless, you should terminate all cooperation intentions immediately if the supplier or its core affiliated parties have active court enforcement records, particularly if they are listed as judgment debtors.
• Most publicly accessible court judgments are available online^(2). Suppliers with a high volume of contract dispute lawsuits are best avoided. For non-delivery-related cases, further detailed analysis is required. In particular, enterprises with frequent private lending disputes or labor disputes pose major risks, as their liquidity, delivery ability and solvency may collapse at any time because of the enforcement of a valid judgement.

>2. Full-text judgments from the past one to two years may not be fully available online, as Chinese courts implement standardized anonymization measures to protect personal and corporate privacy.

• Commercial platforms like Qichacha also document personal litigation records of corporate affiliates. A high number of individual lawsuits among affiliated shareholders, legal representative and actual controller is a strong red flag for cooperation. Most Chinese small and medium-sized enterprises lack strict corporate independence from their shareholders, meaning shareholders’ personal debt and legal disputes often easily undermine the company’s financial and operational stability.

In the past, document preparation was the most complex part of setting up an entity in China. However, since China acceded to the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents (effective November 7, 2023), the process has become significantly simpler.

This guide breaks down the document requirement into two parts:

• Documents from the Foreign Shareholder
• Documents for the Proposed Local Foreign-invested Entity

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2️⃣Documents for the Proposed Local Entity

These documents relate to the new company being incorporated in China.

📚Proposed Company Name Pre-approval Application

• **💻**Submit a name application online via the provincial Administration for Market Regulation portal.
• 💬Naming Convention: City + Brand Name + Industry + Limited Liability Company (all in Chinese)
• 🕰Approval is usually valid for 30 days

📚Proof of Registered Address

• **🏠**A commercial-use property (office, retail space) is mandatory.
• ❌Residential addresses are not permitted for company registration.
• **💻**Submit a valid lease agreement (min. 1-year term is common) and a copy of the property's ownership certificate (with the landlord's signature/seal).

📚Articles of Association (AoA)

• ⚖️Should be drafted in accordance with the Company Law of PRC, covering shareholders' rights, governance, profit distribution, etc.
• **💻**Use the standard template from the website of Administration for Market Regulation as a base to ensure compliance with mandatory clauses.

-------------------------------------------------------------------------

🌟Fully Digital Process

In major cities like Beijing and Shanghai, the entire registration can be done online via an "Integrated Online Service Platform." You can upload scanned copies of apostilled documents. Approval time has shortened to 1-3 working days (versus 1-2 weeks for paper filing).

🌟Negative List Check

Not all industries are open to foreign investment. Before starting, verify that your intended business scope is not on the Special Administrative Measures (Negative List) for Foreign Investment Access (2026 Edition) , which currently has only 27 restricted/prohibited categories.

🌟Post-Registration Steps

After receiving the business license, you must complete tax registration, foreign exchange (SAFE) registration, and open a corporate bank account within 30 days.

In the past, document preparation was the most complex part of setting up an entity in China. However, since China acceded to the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents (effective November 7, 2023), the process has become significantly simpler.

This guide breaks down the document requirement into two parts:

• Documents from the Foreign Shareholder
• Documents for the Proposed Local Foreign-invested Entity

----------------------------------------------------------------------------------------------------

1️⃣Documents from the Foreign Shareholder

These documents prove the legal existence, investment capacity, and authorization of the foreign shareholder. Under the Convention, the previous "dual legalization" (through the Chinese embassy/consulate) is replaced by a faster Apostille process, typically taking only 3-6 working days.

📚Certificate of Incorporation / Identity Proof

• **🏠**If the shareholder is a foreign company: Provide the Certificate of Incorporation, Articles of Association (or equivalent), register of members/directors.
• **👨**If the shareholder is a foreign individual: Provide a clear copy of their passport (must show entry records to China) or a Foreign Permanent Resident ID Card.
• ⚖️These documents must be notarized in their country of origin, then certified with an Apostille by the competent authority of the country.
• 🕰Apostilled documents are generally valid for 6 months.

📚Investment Resolution & Power of Attorney

• **🏠**A board resolution from the foreign company authorizing the establishment of a subsidiary in China and appointing legal representatives/signatories.
• ⚖️This document also needs an Apostille. Ensure the signing officer has the authority per the company's bylaws to avoid rejection.

📚Bank Reference / Solvency Certificate

• 🏦A bank reference letter or recent bank statement from a recognized financial institution in the investor's home country, proving the capacity to inject capital.
• ⚖️The original document is preferred. Some local authorities may require this to be issued within the last 3 months.

📚Identity Documents

• 👨Copies of passports for the proposed legal representatives and directors.
• 🚩Certified Chinese Translation

>✅All foreign-language documents must be accompanied by a Chinese translation by a licensed translation agency in China and stamped with their official translation seal.

>❌Self-translation is generally not accepted.

In the past, document preparation was the most complex part of setting up an entity in China. However, since China acceded to the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents (effective November 7, 2023), the process has become significantly simpler.

This guide breaks down the required documents into two main parts:

• Documents from the Foreign Shareholder
• Documents for the Proposed Local Entity

-------------------------------------------------------------------------

2️⃣Documents for the Proposed Local Entity

These documents relate to the new company being incorporated in China.

📚Proposed Company Name Pre-approval Application

• **💻**Submit a name application online via the provincial Administration for Market Regulation portal.
• 💬Naming Convention: City + Brand Name + Industry + Limited Liability Company (all in Chinese)
• 🕰Approval is usually valid for 30 days

📚Proof of Registered Address

• **🏠**A commercial-use property (office, retail space) is mandatory.
• ❌Residential addresses are not permitted for company registration.
• **💻**Submit a valid lease agreement (min. 1-year term is common) and a copy of the property's ownership certificate (with the landlord's signature/seal).

📚Articles of Association (AoA)

• ⚖️Should be drafted in accordance with the Company Law of PRC, covering shareholders' rights, governance, profit distribution, etc.
• **💻**Use the standard template from the website of Administration for Market Regulation as a base to ensure compliance with mandatory clauses.

-------------------------------------------------------------------------

🌟Fully Digital Process

In major cities like Beijing and Shanghai, the entire registration can be done online via an "Integrated Online Service Platform." You can upload scanned copies of apostilled documents. Approval time has shortened to 1-3 working days (versus 1-2 weeks for paper filing).

Shanghai's online service platform

🌟Negative List Check

Not all industries are open to foreign investment. Before starting, verify that your intended business scope is not on the Special Administrative Measures (Negative List) for Foreign Investment Access (2026 Edition) , which currently has only 27 restricted/prohibited categories.

🌟Post-Registration Steps

After receiving the business license, you must complete tax registration, foreign exchange (SAFE) registration, and open a corporate bank account within 30 days.

In the past, document preparation was the most complex part of setting up an entity in China. However, since China acceded to the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents (effective November 7, 2023), the process has become significantly simpler.

This guide breaks down the required documents into two main parts:

• Documents from the Foreign Shareholder
• Documents for the Proposed Local Entity

----------------------------------------------------------------------------------------------------

1️⃣Documents from the Foreign Shareholder

These documents prove the legal existence, investment capacity, and authorization of the foreign shareholder. Under the Convention, the previous "dual legalization" (through the Chinese embassy/consulate) is replaced by a faster Apostille process, typically taking only 3-6 working days.

📚Certificate of Incorporation / Identity Proof

• **🏠**If the shareholder is a foreign company: Provide the Certificate of Incorporation, Articles of Association (or equivalent), register of members/directors.
• **👨**If the shareholder is a foreign individual: Provide a clear copy of their passport (must show entry records to China) or a Foreign Permanent Resident ID Card. ⚖️These documents must be notarized in their country of origin, then certified with an Apostille by the competent authority of the country.
• 🕰Apostilled documents are generally valid for 6 months.

📚Investment Resolution & Power of Attorney

• **🏠**A board resolution from the foreign company authorizing the establishment of a subsidiary in China and appointing legal representatives/signatories.
• ⚖️This document also needs an Apostille. Ensure the signing officer has the authority per the company's bylaws to avoid rejection.

📚Bank Reference / Solvency Certificate

• 🏦A bank reference letter or recent bank statement from a recognized financial institution in the investor's home country, proving the capacity to inject capital.
• ⚖️The original document is preferred. Some local authorities may require this to be issued within the last 3 months.

📚Identity Documents

• 👨Copies of passports for the proposed legal representatives and directors.
• 🚩Certified Chinese Translation

>✅All foreign-language documents must be accompanied by a Chinese translation by a licensed translation agency in China and stamped with their official translation seal.

>❌Self-translation is generally not accepted.

Sequel to the post How to remit money from overseas to China for the purpose of establishing a Foreign-Invested Enterprise (FIE)?——An Introduction of Foreign Exchange Registration Policy in China1️⃣ (on 10 July)

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3️⃣Opening a Foreign Exchange Capital Account

An FIE may open capital accounts in different locations and may open multiple capital accounts if necessary.

With the Business Registration Certificate, an FIE can directly open an FX capital account at a bank for receiving investment capital remitted from its overseas investors.

 📋 Documents needed for opening an FX captial account:

• Business Registration Certificate
• Capital inflow control information form, which is printed from the Capital Account Information System by the bank
• Business license
• Account opening permit / information of RMB basic account
• Legal representative's identity document
• FIE's articles of association
• FIE's company seal and financial seal, also the legal representative's personal seal
• Copies of identity documents of shareholders with a shareholding ratio of 25% or more (if applicable)

4️⃣Receive Capital Fund from Overseas Investors

The overseas investor shall, in the currency (USD/EUR/RMB, etc.) stipulated in the FIE's articles of association, remit the funds from a bank account held in the overseas investor's own name to the FIE's FX capital account. The purpose of the remittance shall be indicated as "资本金" or "Investment Capital", and the FIE's name together with its Uniform Social Credit Code shall be entered in the remarks column.

After the funds have been received, you are required to complete the registration of receiving captial contribution in currency with the bank. The following documents are required:

• Business Registration Certificate
• Capital inflow control information form provided by the bank
• The Registration Application Form for receiving captial contribution in currency for Domestic Direct Investment submitted by the FIE

Once the registration is complete, the captial fund can be used, in the following ways including:
👛Exchange settlement at will: the FIE can exchange the investment capital in foreign currency into CNY, which will go into a 'pending payment account,' and the FIE can use the CNY later by providing the bank with proofs of actual external payment requirement.

💻Exchange settlement at payment: when the FIE has a real payment need, it can directly handle the exchange settlement and payment, but it must provide the bank with proofs of transaction authenticity for each payment.

💰Reinvestment in China: non-investment-oriented FIEs, subject to compliance requirements in China, can use their capital funds to engage in domestic equity investments (proof documents of the invested enterprises must be retained for reference). Foreign exchange profits of such FIEs can be directly used for reinvestment within China, without the need for foreign exchange purchases. All required is an audited financial report and an investment agreement.

5️⃣Red flags regarding foreign exchange capital

🏦The source of capital funds should be legal, and the following actions are prohibited:

❌ Directly transferring funds from a foreign investor's personal savings account in China to the FIE’s capital account.

❌ Masquerading as capital by borrowing domestically from affiliated companies of the FIE.

❌ Using a domestic company to collect overseas funds and then convert them into capital (i.e., conducting illegal FX arbitrage).

🪙The use of capital funds should also be legal, and the following actions are prohibited:

❌ Directly or indirectly spending on events prohibited by laws and regulations.

❌ Investing securities or making other finance investments (not including finance products with risk level ≤ Level 2 or structured deposits).

❌ Lending to non-affiliated companies of the FIE.

❌ Purchasing residential real estate for commercial usage (not including FIEs engaged in real estate development or leasing business).

Many overseas companies or individuals, when planning to enter the Chinese market, often ask the same question:

❓What type of entity should be used for a startup in China❓

Five types most common in China:

1️⃣Wholly Foreign Owned Enterprise (WFOE)

📚An enterprise established in China that is 100% owned by foreign companies or individuals. Most mainstream entity type currently.

👨The shareholder has complete independent authority in business decision-making. Profits can be distributed to overseas shareholders.

🚩Registered capital must be actually invested within five years of establishment.

💰Can conclude commercial contracts, issue VAT invoices and collect payments.

👷‍♀️Can normally recruit local employees.

🌍Businesses engaged in trade, e-commerce, manufacturing, consulting, general local service (e.g., English teaching, physical education, catering)

2️⃣Joint Venture (JV)

📚Chinese and foreign shareholders (company/individual) jointly establish a company.

👨Major decisions require the agreement of both parties, and profits should be distributed according to shareholding percentage.

🚩Registered capital must be actually invested within five years of establishment.

💰Can conclude commercial contracts, issue VAT invoices and collect payments.

👷‍♀️Can normally recruit local employees.

**🌍**Many industries with foreign investment restrictions adopt JV, such as healthcare services, finance, and some specialised areas of manufacturing (For example, the automobile manufacturing industry. Actually, policies have been adjusted in recent years. Tesla has already set up a wholly-owned factory in Shanghai).

3️⃣Branch

📚Just branch of a WFOE or JV. All legal and operational risks of a Branch should be borne by the WFOR or JV.

❌Foreign companies cannot directly establish a Branch in China.

🚩No need for registered capital.

💰Can conclude commercial contracts, issue VAT invoices and collect payments.

👷‍♀️Can normally recruit local employees.

4️⃣Representative office

📚A light entity that cannot conduct operational activities.

❌CANNOT conclude commercial contracts, issue VAT invoices or collect payments.

✅CAN only do market research, business liaison and brand promotion.

🌍Many overseas brands take Representative Offices as a preliminary test before entering the Chinese market.

5️⃣VIE

📚VIE is a special type of Red Chip structure. In many industries, foreign ownership is not allowed, then overseas companies choose to control a Chinese company via contractual arrangements.

🚩Internet service, Cloud service, AI, Media, etc.

💰Can conclude commercial contracts, issue VAT invoices and collect payments.

👷‍♀️Can normally recruit local employees.

🌍The construction of VIE structure is costly and is suitable for overseas financing and listing.

Many overseas companies or individuals, when planning to enter the Chinese market, often ask the same question:

❓What type of entity should be established❓

Five types most common in China:

1️⃣Wholly Foreign Owned Enterprise (WFOE)

📚An enterprise established in China that is 100% owned by foreign companies or individuals. Most mainstream entity type currently.

👨The shareholder has complete independent authority in business decision-making. Profits can be distributed to overseas shareholders.

🚩Registered capital must be actually invested within five years of establishment.

💰Can conclude commercial contracts, issue VAT invoices and collect payments.

👷‍♀️Can normally recruit local employees.

🌍Businesses engaged in trade, e-commerce, manufacturing, consulting, general local service (e.g., English teaching, physical education, catering)

2️⃣Joint Venture (JV)

📚Chinese and foreign shareholders (company/individual) jointly establish a company.

👨Major decisions require the agreement of both parties, and profits should be distributed according to shareholding percentage.

🚩Registered capital must be actually invested within five years of establishment.

💰Can conclude commercial contracts, issue VAT invoices and collect payments.

👷‍♀️Can normally recruit local employees.

**🌍**Many industries with foreign investment restrictions adopt JV, such as healthcare services, finance, and some specialised areas of manufacturing (For example, the automobile manufacturing industry. Actually, policies have been adjusted in recent years. Tesla has already set up a wholly-owned factory in Shanghai).

3️⃣Branch

📚Just branch of a WFOE or JV. All legal and operational risks of a Branch should be borne by the WFOR or JV.

❌Foreign companies cannot directly establish a Branch in China.

🚩No need for registered capital.

💰Can conclude commercial contracts, issue VAT invoices and collect payments.

👷‍♀️Can normally recruit local employees.

4️⃣Representative office

📚A light entity that cannot conduct operational activities.

❌CANNOT conclude commercial contracts, issue VAT invoices or collect payments.

✅CAN only do market research, business liaison and brand promotion.

🌍Many overseas brands take Representative Offices as a preliminary test before entering the Chinese market.

5️⃣VIE

📚VIE is a special type of Red Chip structure. In many industries, foreign ownership is not allowed, then overseas companies choose to control a Chinese company via contractual arrangements.

🚩Internet service, Cloud service, AI, Media, etc.

💰Can conclude commercial contracts, issue VAT invoices and collect payments.

👷‍♀️Can normally recruit local employees.

🌍The construction of VIE structure is costly and is suitable for overseas financing and listing.

How to remit money from overseas to China for the purpose of establishing a Foreign-Invested Enterprise (FIE)?——An Introduction of Foreign Exchange Registration Policy in China1️⃣

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3️⃣Opening a Foreign Exchange Capital Account

An FIE may open capital accounts in different locations and may open multiple capital accounts if necessary.

With the Business Registration Certificate, an FIE can directly open an FX capital account at a bank for receiving investment capital remitted from its overseas investors.

 📋 Documents needed for opening an FX captial account:

• Business Registration Certificate
• Capital inflow control information form, which is printed from the Capital Account Information System by the bank
• Business license
• Account opening permit / information of RMB basic account
• Legal representative's identity document
• FIE's articles of association
• FIE's company seal and financial seal, also the legal representative's personal seal
• Copies of identity documents of shareholders with a shareholding ratio of 25% or more (if applicable)

4️⃣Receive Capital Fund from Overseas Investors

The overseas investor shall, in the currency (USD/EUR/RMB, etc.) stipulated in the FIE's articles of association, remit the funds from a bank account held in the overseas investor's own name to the FIE's FX capital account. The purpose of the remittance shall be indicated as "资本金" or "Investment Capital", and the FIE's name together with its Uniform Social Credit Code shall be entered in the remarks column.

After the funds have been received, you are required to complete the registration of receiving captial contribution in currency with the bank. The following documents are required:

• Business Registration Certificate
• Capital inflow control information form provided by the bank
• The Registration Application Form for receiving captial contribution in currency for Domestic Direct Investment submitted by the FIE

Once the registration is complete, the captial fund can be used, in the following ways including:
👛Exchange settlement at will: the FIE can exchange the investment capital in foreign currency into CNY, which will go into a 'pending payment account,' and the FIE can use the CNY later by providing the bank with proofs of actual external payment requirement.

💻Exchange settlement at payment: when the FIE has a real payment need, it can directly handle the exchange settlement and payment, but it must provide the bank with proofs of transaction authenticity for each payment.

💰Reinvestment in China: non-investment-oriented FIEs, subject to compliance requirements in China, can use their capital funds to engage in domestic equity investments (proof documents of the invested enterprises must be retained for reference). Foreign exchange profits of such FIEs can be directly used for reinvestment within China, without the need for foreign exchange purchases. All required is an audited financial report and an investment agreement.

5️⃣Red flags regarding foreign exchange capital

🏦The source of capital funds should be legal, and the following actions are prohibited:

❌ Directly transferring funds from a foreign investor's personal savings account in China to the FIE’s capital account.

❌ Masquerading as capital by borrowing domestically from affiliated companies of the FIE.

❌ Using a domestic company to collect overseas funds and then convert them into capital (i.e., conducting illegal FX arbitrage).

🪙The use of capital funds should also be legal, and the following actions are prohibited:

❌ Directly or indirectly spending on events prohibited by laws and regulations.

❌ Investing securities or making other finance investments (not including finance products with risk level ≤ Level 2 or structured deposits).

❌ Lending to non-affiliated companies of the FIE.

❌ Purchasing residential real estate for commercial usage (not including FIEs engaged in real estate development or leasing business).

China is already a country with 1.1 billion internet users, of which 99.6% are mobile internet users. Therefore, after entering the Chinese market, FIEs generally choose to set up one or more types of online platforms to promote their companies, products or services, and may further proceed to directly sell services/products online (via websites with e-commerce features, or WeChat, Douyin and other self-media platforms with e-commerce functions). Implementing these functions is not particularly difficult, however, it is important to note that Chinese laws regulate internet businesses in a tiered manner. Depending on the type of platform chosen, the qualifications required will differ.

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💰 For commercial internet service platforms

The following qualification requirements apply to all types of commercial internet service platforms：

• Self-built website
• Wechat service account (a type of wechat public account with specific functions, e.g., a hospital account for registrations, prescription, payment, etc.)
• Mini program (built on major platforms such as WeChat, Alipay, Douyin, etc.)
• App

🚩ICP Filing

🚩Public Security Filing

🚩Qualification requirements for special industries

[Please refer to the first part of this Post "In China, what qualifications are required when setting up an online platform?1️⃣"]

🚩ICP Permission^(1)

>

🚩MLPS/CCPS Filing^(2)

>

🚩E-commerce qualification

❌If only selling your own products on your platform, no additional value-Added telecommunication business permission is required

✅if selling third-party products/services on your platform, or providing SaaS system services to external parties, an EDI (Electronic Data Interchange) Permission^(3 4) is required.

>

>4. Currently, to apply for an EDI Permission, the regulatory authorities require that the legal representative of the FIE should be a Chinese, and foreign shareholders need to provide proof of telecom business operation experience for the past three years (for example, commercial contracts, operating licenses for similar overseas platforms, etc.).

If a domestic company in China (including an FIE) wants to hire a foreign employee, it needs to apply for a "Foreigner’s Work Permit" and work-type residence permit for the foreigner to ensure legal employment.

However, if the foreigner is the shareholder or legal representative of an FIE, does he/she need a "Foreigner’s Work Permit" in China❓

The answer is:

❌If a foreigner is a shareholder or legal representative of an FIE, but does not hold any position or directly participate in the company's management, he/she is not considered to be employed in China, and do not need to apply for a "Foreigner’s Work Permit".

 ✅If the foreign shareholder or legal representative wants to participate in the daily operations of the FIE, hold a specific position, or plan to get a salary from the FIE, he/she will be considered employed in China and must apply for a "Foreigner’s Work Permit".

 

🚩Consequences of not applying for a "Foreigner’s Work Permit" legally

According to Articles 41, 43, and the first paragraph of Article 80 of the "Exit and Entry Administration Law of the People's Republic of China," foreigners working in China must obtain a work permit and work-type residence permit as required. Foreigners working in China without the required work permit and residence permit are considered to be working illegally, and may be fined of 5,000 to 20,000 RMB; in severe cases, they may face detention of 5 to 15 days as well as a fine of 5,000 to 20,000 RMB.

Foreigners seeking to obtain Foreign Permanent Resident ID in China have the following four main pathways:

1️⃣Direct investment in China for at least three consecutive years or more

2️⃣Holding certain top management position in a company or public institution for at least four consecutive years, with a cumulative stay in China of no less than three years during the tenure

3️⃣Making outstanding contributions to China, or being a talent in urgent need in China (such as scientists, athletes, etc.)

4️⃣Family reunion, such as with spouse or children

 🌟In addition, various regions have some unique policies. For example, Shanghai government encourages highly educated foreigners working in Shanghai (PhD or higher) and high-salary foreigners working in the Lin-Gang Special Area of China (Shanghai) Pilot Free Trade Zone for three years to apply for Permanent Resident ID.

----------------------------------------

For the 1️⃣st pathway of direct investment in China, the specific requirements are as follows (taking Shanghai as an example):

1. Invest directly in Shanghai as an individual or through a company in which the individual is the controlling shareholder (the FIE should be registered in Shanghai)
2. Maintain a stable investment for three consecutive years, with a total paid-in investment amount of no less than 1 million USD (if investing in industries encouraged under the "Catalog of Foreign Investment Industries" issued by the state, the total investment amount can be 500,000 USD)
3. Comply with Chinese laws, be in good health, have no criminal record, and have a good tax record

 

📚Application materials required

• "Application Form for Foreign Permanent Resident ID in China"
• Valid passport and visa/residence permit
• Health certificate (issued by a designated institution, valid for six months)
• Identification photo (white background, 33×48mm)
• Certificate of no criminal record issued by the applicant's home country (must be authenticated by Chinese embassy or consulate in that country, issued within six months before application)
• Certificate of no criminal record issued by the local Public Security Bureau in China (issued within six months before application)
• Business license of the FIE
• Capital verification report of the FIE
• Tax payment certificate of the FIE

Foreigners seeking to obtain Foreign Permanent Resident ID in China have the following four main pathways:

1️⃣Direct investment in China for at least three consecutive years or more

2️⃣Holding certain top management position in a company or public institution for at least four consecutive years, with a cumulative stay in China of no less than three years during the tenure

3️⃣Making outstanding contributions to China, or being a talent in urgent need in China (such as scientists, athletes, etc.)

4️⃣Family reunion, such as with spouse or children

 🌟In addition, various regions have some unique policies. For example, Shanghai government encourages highly educated foreigners working in Shanghai (PhD or higher) and high-salary foreigners working in the Lin-Gang Special Area of China (Shanghai) Pilot Free Trade Zone for three years to apply for Permanent Resident ID.

----------------------------------------

For the 1️⃣st pathway of direct investment in China, the specific requirements are as follows (taking Shanghai as an example):

1. Invest directly in Shanghai as an individual or through a company in which the individual is the controlling shareholder (the FIE should be registered in Shanghai)
2. Maintain a stable investment for three consecutive years, with a total paid-in investment amount of no less than 1 million USD (if investing in industries encouraged under the "Catalog of Foreign Investment Industries" issued by the state, the total investment amount can be 500,000 USD)
3. Comply with Chinese laws, be in good health, have no criminal record, and have a good tax record

 

📚Application materials required

• "Application Form for Foreign Permanent Resident ID in China"
• Valid passport and visa/residence permit
• Health certificate (issued by a designated institution, valid for six months)
• Identification photo (white background, 33×48mm)
• Certificate of no criminal record issued by the applicant's home country (must be authenticated by Chinese embassy or consulate in that country, issued within six months before application)
• Certificate of no criminal record issued by the local Public Security Bureau in China (issued within six months before application)
• Business license of the FIE
• Capital verification report of the FIE
• Tax payment certificate of the FIE