setting up a trading company in China
Nov 01, 2011

setting up a trading company in China

As the world’s manufacturing plant and one of the most vast markets, it is a good business to export goods made in china to other parts of the world, and so is importing goods into China’s market.

Indeed, there are many foreign investors that have set up trading companies in China that are engaged in either exporting or importing goods out of or into China.

I        Exporting Business

Strictly speaking, an exporting company, purchasing goods from suppliers in China and selling the same to custormers outside China, is also classified as a commerce company under the Administrative Measures for Foreign Investment in Commerce (the “Measures”). If a foreign invested trading company only conducts exporting business, it will be much easier to set up as Chinese government is still encouraging exporting of China made goods, though incentive for exporting, such as tax rebate is no longer that attractive as before esp for certain kinds of goods.

Therefore, foreign invested trading companies are almost having no problem in setup course. Generally, it will not need to be subject to the approval of China Ministry of Commerce (the “MOFCOM”)

II        Importing and Distribution Business

The complexity for foreign invested trading companies is related to those that distribute goods (either imported or procured in China) within China. Literally speaking, the Measures is a set of rules for distribution of products in China. Business activities regulated under the Measures include (1) commission agency, refering to agents, brokers, auctioneers or other wholesellers selling goods owned by others for a commission, and accessory services, (2) wholesale, refering to selling goods to retailers, industrial, commercial, and other institutional customers, and accessory services, (3) retail, refering to selling goods to individual or group consumers at a certain places, via television, phone, post, internet and vending machines, and (4) franchising, refering to authorizing other people to use one’s trademark, tradename or business models for remuniration or fees. Foreign investors intending to carry out such distribution activities shall be in compliance with the rules under the Measures.

With the Measures coming into effect, foreign invested trading company can now take the form of wholly foreign owned enterprise (“WFOE”), and can now distribute their imported goods within China.

III        Approval Procedures

1.        Foreign invested trading companies that do exporting business only  will be approved by foreign investment administration (commerce department) at the provincial level. In practice, this approving power can be delegated to lower governments, as China has been encouraging exports all the time.

2.        Foreign invested trading companies that do importing and distribution businesses will have to be approved by foreign investment administration at provincial level or MOFCOM depending on type of goods and type of distribution methods.

Since the adoption of the Measures, MOFCOM has been delegating approving power to provincial levels. In 2008, MOFCOM has delegated the approving power of most foreign invested commerce enterprises/trading companies to provincial commerce department except for foreign invested commerce enterprises that sell goods through television, phone, post, internet and vending machines or that wholesale visual and vedio products, or sell books, newspaper and periodicals.

In another notice issued in 2009, MOFCOM has clearly provided that provincial commerce department may upon consent from MOFCOM further delegate the approving power to the immediately lower level commerce department, which make it easier and faster to set up such trading companies.

Existing foreign invested non-trading companies may apply to add distribution to their current business scope to cover distributing activities.

Foreign investors may also consdier acquiring domestic commerce enterprises to set up their own distribution network in China.

For further information about the topic, please contact the author, Jason Tian, at [email protected], or [email protected], or give him a call at: +8621-20283433, or +8613816548421.

Comments

  1. M. Salman Qureshi says:

    I am an individual from Pakistan looking for setup a office in China for trading.I am interested in purchasing goods from China and sell in Pakistan. I am also coming China soon on visit to get some understanding of this business. I am looking for getting some information on this from you like, the requirement, investment, procedure and any information on this regard will be highly appreciated. Waiting for hearing from you. Thanks

  2. Nasir Khan says:

    Hi,

    I m belong from Pakistan Karachi, And interested to open office in china to export goods to pakistan and Afghanistan.
    In this regard kindly guide me for:

    1. How much minimum Capital required to open an export office.
    2.And what documentation required for that purpose and other detail too.

    Waiting for your earlier reply.

    Nasir Khan

  3. AMJAD says:

    Hi Dear
    Good Day
    I am from Pakistan but presently in SHANGHAI. I want to open up a smallest level of business company(Initially). I want to buy machinery equipment and spare parts items from China and send to Pakistan. I don’t know that for such business which type of company any foreigner can open.
    1- what is the category or status of such company.
    2- How much minimum compulsory finance is required.
    3-What are the facilities from Chinese Government will be offered with such company.
    What will be your service charges.
    REGARDS

  4. ahmed says:

    i need to start trading company in china
    I am interested to open an IMPORT & EXPORT Trading Company in China by myself. how mouch will cost me & easy to open

  5. Currently I am residing in New Delhi,India & fecilitating Import of various kinds of goods from China to Ind. I have a very interested to open an IMPORT & EXPORT Trading Company in China by myself. From where I can export goods from China to.
    If I able to set up a IMP EXP Trading company in China, easily I can hold those customers and exporter all different different items/goods in india.
    I have a interest to open IMP EXP Trading company in Zhejiang Province (JINYUN City). Overall a city which will cost me less to open & easy to open. Not in Shanghai or expensive cities.
    I hope I can make you clear about what I mean. So please let me know below thing:
    – What are the process to open it?
    – As I am Indian not Chinese therefore is it easy to open for me or is there any special requirements for me?
    – How much investment I have to show?
    – How many days it will take to open?
    – What about Tax rebate? Will I get this benefit from Chinese Government by exporting goods from China to Bangladesh or Other countries around the world.
    In addition if I can open the company in China not only in India I can also export goods in UK & Dubai as I have relative over there and doing business with China.
    Please let me know.

    1. Jason Tian says:

      You have a very brilliant idea to open trading company in China which can export goods to the world. It can be done. However, as you are aware that I am in Shanghai, I cannot help you much in setting up the company in Zhejiang as I am not very familiar with local practice though that should not deviate much from Shanghai practice. I advise you to approach a local lawyer that is on the ground to help you.

  6. mouhib alobaidi says:

    i need to start trading company in china .its main scope to purchase our same product what we export to other countries

    Kindly advise..
    1)how to establish trading company.
    2)if any special requirement?
    3)how is the local tax involve in above business.
    Thank you in advance.
    mouhib

    1. Jason Tian says:

      Dear Mouhib, thanks for leaving question here. sorry for late reply due to technical problem. For how to set up a trading company, please refer to: https://www.sinoblawg.com/?p=158 for more. For tax implications, please read this post on this blog: https://www.sinoblawg.com/?p=238 .

  7. mouhib alobaidi says:

    i need to start trading company in china .its main scope to purchase our same product what we export to other countries ,
    Kindly advise..
    1)how to establish trading company.
    2)if any special requirement?
    3)how is the local tax involve in above business.
    Thank you in advance.
    mouhib

  8. Rajesh Jadhav says:

    Dear Sir,

    We have R.O in shenzhen China.

    Our head office in china.Currently we working with many factories in china.

    now we want to start trading company in china .its main scope to purchase our same product what we export to other countries , to sell in china only.

    Kindly advise..

    1)how to establish trading company.
    2)if any special requirement?
    3)how is the local tax involve in above business.

    Thank you in advance.

    Regards,
    Ricky

  9. Md Rakibur Rahman says:

    Dear Sir/Madam,
    Have a nice time.

    Currently I am residing in Bangladesh & Importing various kinds of goods from China to Bangladesh. I have a very interested to open an IMPORT & EXPORT Trading Company in China by myself. From where I can export goods from China to Bangladesh.

    In Bangladesh I have a wide range of network in different items / goods market in Bangladesh. If I able to set up a IMP EXP Trading company in China, easily I can hold those customers and exporter all different different items/goods in Bangladesh.

    I have a interest to open IMP EXP Trading company in Zhejiang Province (JINYUN City). Overall a city which will cost me less to open & easy to open. Not in Shanghai or expensive cities.

    I hope I can make you clear about what I mean. So please let me know below thing:

    – What are the process to open it?

    – As I am Bangladeshi not Chinese therefore is it easy to open for me or is there any special requirements for me?

    – How much investment I have to show?

    – How many days it will take to open?

    – What about Tax rebate? Will I get this benefit from Chinese Government by exporting goods from China to Bangladesh or Other countries around the world.

    In addition if I can open the company in China not only in Bangladesh I can also export goods in UK & Dubai as I have relative over there and doing business with China.

    Please let me know and it will help my career to build it nicely.

    Thanking you
    Rakibur Rahman

  10. Mohsen says:

    Dear sir/Madam,
    I am interested in establishing a WFOE in china for trading.
    Our company scope is:
                Exporting Chinese products to Other countries and also importing from another countries to china
     
     
    Regarding we are an Iranian company we need just a paper company to open and receive LC from other countries.

    Please let me know which city has the lowest tax and better for trading.

    Also please let me know if it is possible to get LC in china and send the goods from second country to third country?? Ex, we need to open LC from Indonesia to our account in China, but we need send the product from Iran to Indonesia, so is it possible to get and cash our profit in china bank account?
     
    Moreover, tell me all costs and charges including initial capital ( percentage), your consultancy fees, governmental, office rent, etc….

    To sum up, please send me all your proposal to establish a company in china.
     
    Your kind understanding and prompt reply will be appreciated in advance.
    Regards,
    Mohsen
     

    1. Jason Tian says:

      Dear Mohsen, I have sent you an email to your account. Please check.

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