How to open an office in China and register a legal entity with United Suppliers Group? Choosing the right business structure in China

When starting a business in China, understanding the different company types is crucial because each has distinct requirements, benefits and limitations. The structure you choose impacts your legal responsibilities, tax obligations and operational flexibility. Getting this decision right from the beginning saves time, money and potential legal complications down the road.

Here are the main business entities available in China and their key characteristics.

• Limited Liability Company (LLC)

The most common business type in China. An LLC is a separate legal entity, independent of its investors, who are only liable up to their contributed capital. An LLC can have 1 to 50 shareholders.

The company name must be unique and include "有限公司" (Co., Ltd). If a name is already taken, registration may be denied. Shareholders appoint a Board of Directors (or an Executive Director) and a Legal Representative, who is responsible under Chinese law.

The company is managed either by a Board of Directors or a single Executive Director, who makes key decisions. An LLC is a full market participant and can engage in trade, import/export, and other commercial activities.

Types of LLCs in China:

1. Domestic Chinese companies - 100% Chinese-owned.

2. Wholly Foreign-Owned Enterprises (WFOEs) - 100% foreign-owned (by legal entities or individuals).

3. Joint Ventures (JVs) - Mixed Chinese and foreign ownership (minimum 25% foreign stake).

Joint Ventures are used when Chinese law requires a local partner (e.g., telecom, logistics, printing, wholesale pharmaceutical materials) or when a foreign company needs a local partner to enter the Chinese market. 

• Joint Stock Company (JSC)

A JSC is a separate legal entity, independent of shareholders. It can be public or private, and shareholders' liability is limited to their shares. The name must include "股份公司" (Joint Stock Company) or "有限公司" (Co., Ltd).

There are two ways to establish:

1. Promotion - Founders subscribe to all shares.

2. Share Offer - Founders take some shares, the rest are sold to the public or specific groups.

It requires 2-200 founders, with over half residing in China. Shareholders are not personally liable for company debts. It's managed by a Shareholders' Meeting and Articles of Association, with only one class of shares allowed.

• Partnership

A partnership is not a separate legal entity, meaning partners are personally tied to the business. The partnership agreement acts as the governing document.

There can be 2-50 partners of two types:

1. General Partners - Unlimited liability for debts.

2. Limited Partners - Liability limited to their contributions (cash, assets, or IP).

Partners share profits/losses and pay taxes individually. It's managed by one or more general partners. This form is common in law firms, accounting, and consulting where autonomy is key.

• Representative Office (RO)

An extension of a foreign company, not an independent legal entity. Cannot engage in profit-making activities.

 Restrictions include:

Cannot issue invoices or receive payments

Cannot buy property or import equipment

Cannot sign contracts directly

Can receive funds from the parent company and pay employee expenses

An RO can have maximum 4 foreign employees (no mandatory local hiring quotas). It must maintain accounting records and pass inspections, and submit an annual legalized certificate from the parent company. Mostly used by large corporations for temporary projects or staff placement.

• Sole Proprietorships & State-Owned Enterprises (SOEs) are not available to foreign founders.

For most foreign entrepreneurs, an LLC (especially WFOE or JV) is the best option. We can assist you with establishing any of these business types in China, handling all necessary registrations and compliance procedures to ensure your business starts smoothly and operates within Chinese legal requirements.

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Need Help Setting Up Your Business in China?

Choosing the right structure is just the beginning. Next comes registration, licenses, taxes, and compliance—each step has its own rules and deadlines.

United Suppliers Group has years of experience helping foreign entrepreneurs open businesses in China. Whether you need a WFOE, Joint Venture, or Representative Office, we handle the paperwork, legal requirements, and government approvals so you can focus on growing your business.

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