The Most Popular Business Types in China 2019

If you have read our previously guidance for How Selecting a Company Type , you can get more details on different requirements of company structure.

Registered capital and foreign company registration process will be different because of the different types of companies. Therefore, you also need to understand the types of foreign companies in order to choose the most appropriate form of enterprise formation and capital contribution. Then, what are the specific types of foreign companies registered in Shanghai? Let’s answer what types of foreign companies are popular in China.

1. Sino-foreign cooperative enterprises

A Chinese-foreign cooperative enterprise is a contractual enterprise that is established in China by foreign companies, other economic organizations or natural persons and domestic enterprises, or other economic organizations. The cooperation conditions, income distribution, risk and loss sharing, investment recovery and management methods of the parties involved and the ownership of the remaining assets at the time of termination of the cooperation are all stipulated in the contract. The most important difference between Sino-foreign cooperative enterprises and Sino-foreign joint ventures is that the conditions for investment or cooperation of the parties may not be converted into equity or, although being converted into equity, the distribution of income, risk, debt sharing, and allocations of the remaining assets of the company at the time of termination, etc., may be determined entirely or not entirely in accordance with the status of the equity of their investments. Investment recovery methods and management methods can also be different from joint ventures and have greater flexibility.

2. Sino-foreign joint ventures

Sino-foreign joint ventures are equity-type limited liability companies that are jointly invested, jointly operated, profits and risk sharing by Chinese and foreign companies, other economic organizations or natural persons. All parties to the investment share profits, risks and losses according to the proportion of registered capital investment (equity). In May 2010, Shanghai Pudong New Area (including Nanhui) launched a pilot project for Chinese-foreign natural person joint ventures.

3. Foreign-owned enterprises

A foreign-owned enterprise is an enterprise that is established in China by foreign companies, other economic organizations or natural persons, of which the entire capital is contributed by foreign investors. The profits earned by enterprises are all owned by foreign investors.

4. Foreign investment companies limited by shares

A foreign-invested company limited by shares is composed of shares in the same numbers; shareholders assume responsibility for the company with their subscribed shares; the company assumes responsibility for its debts with all its assets. Among them, the legal person purchased and held by foreign shareholders is more than 25% of the registered capital of the company. The establishment of companies can adopt sponsorship or fundraising methods.

5. Foreign-invested companies

Foreign-invested companies are companies set up by foreign investors in China in the form of a wholly-owned venture or a joint venture with Chinese investors to make direct investment in the form of a limited company.

Popular 9 Types of Companies and Organizational Forms

Recommend readingChina Companies Help and Support Center to learn more from a collection of guidance on startup, registration, formation, running and operations for Chinese Companies. Through this page to learn more if you plan to startup a private business in China.

Ready to Start and Launch a Business in China? So Are We.

SMEsChina teams focus on the growth of enterprise and providing a variety of business solutions in the area of strategy consultancy, WFOE setting up services, business registration, company formation, incorporation of domestic invested enterprise, finance and audit services, HR and payroll, corporate bank account, resident permit, immigration and visa, trademarks and legal compliance.

China is attracting more and more foreign companies, SMEs,entrepreneurs, startups, brands to invest and establish their business entities through reforming various laws and regulations actively. More than 47 million companies and small medium enterprises have registered their business entities in mainland China and over 3.5 million new enterprises are incorporated during each financial year with comfortable process of registering companies. Here SMEsChina is sharing our knowledge and business insights to global enterprises and companies for better learning the regulations and rules of China corporations running and corporate maintaining. All reference and guidance collected by SMEsChina Teams in accordance with the latest implemented laws of the People’s Republic of China on Wholly Foreign-Owned Enterprises ( WFOE ), Joint Venture ( JV ) and Limited Liability Company ( LLC ), Limited Liability Partnership ( LLP ), and other relevant and officially promulgated regulations and rules on the corporation formation and registration of industrial and commercial enterprises and related IP laws, immigration and resident policies ( VISA ), tax laws.

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