The People's Republic of China is the world's most populous country, with a population of around 1.4 billion. It is the largest economy in the world by PPP since 2014, the second-largest by nominal GDP since 2010, and the world's largest manufacturing economy. With the world’s fastest-growing consumer market, China is a great place to start your own company, with the most common type being a sole proprietorship.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
Sole proprietorship in China
As the name implies, it is owned by a single individual who bears complete liability for the small private company. A Chinese sole proprietorship must be owned by a Chinese national. However, it is possible to invest in a small enterprise as such by setting up a Joint Venture (JV) that requires a Chinese partner or applying directly for a Wholly Foreign-Owned Enterprise (WFOE).
Most suitable business fields for a sole proprietorship are:
- Selling goods by offline retail stores
- Sales counter of agricultural products
- Restaurants, coffee shops
- Milk tea shops, flower shops
- Gymnasiums, yoga gyms
- Bars and Liquor shoppes
- Grocery, cooking-oil food stores
- Handmade articles, workshops
- Aquatic products counter, etc.
Depending on your chosen business field, you will not only have to register the sole trader, but will also need special permits and licenses for certain types of businesses, like a restaurant.
Sole traders cannot apply for import and export licenses and permits to operate international businesses.
Conditions for setting up a sole proprietorship
- The investor is a natural person;
- It has a legal enterprise name;
- The enterprise has registered capital contributions by the investor;
- It has a fixed production and operation site and necessary production and business conditions;
- The enterprise has the requisite employees.
Here are the documents required for registration:
- An application form for the establishment of a sole proprietorship enterprise signed by the investor ;
- The investor’s identity certificate;
- Proof of the domicile of the enterprise;
- Other documents required by the State Administration for Market Regulation (SAMR).
The individual-owned enterprises must register within 15 days from the determination of the following information below:
- Name and domicile of the enterprise
- Name and residence of the investor
- Amount and method of capital contribution of the investor
- Business scope
Applicants must submit the relevant documents to the SAMR and obtain an official business license and company a seal upon approval.
Opening a bank account
You will also need to open a local bank account. The process is easy and quick. You need to provide your original ID, approved business license and company stamps. Submit them to a local bank to obtain approval.