Expand Business in China

Global Upside helps businesses expand into China by providing talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organization (PEO)/employer of record (EOR) services. Our comprehensive offerings create an end-to-end solution that helps you establish your business and optimize your operations, all while maintaining compliance with Chinese laws and regulations.

The hiring and incorporation processes in China are often complex, time-consuming, and involve numerous legal and compliance challenges. Global Upside simplifies these processes and lifts the compliance burden from your business. Our teams have the experience and expertise required to help you establish a legal entity in China. We also offer PEO/EOR solutions to companies interested in hiring employees quickly, without setting up a legal entity in the country.

Capital City

Beijing

Currency

Yuan Renminbi (CNY)

Language

Mandarin, Cantonese

Government

Communist party-led state

Country Overview

China has the second-largest economy in the world and is a prominent economic and technological dominion in eastern Asia. Additionally, the country has the world’s largest hydroelectric power potential and numerous mineral resources. China can be a complicated country to do business for newcomers since it has several provinces, each with its own set of criteria.

Legal Entity Setup

Options for setting up a legal entity in China include:

Limited Liability Company (LLC)

A limited liability company usually has up to 50 investors, and generally, there is no personal liability of shareholders. Taxed at two levels (commonly referred to as double taxation) – an LLC pays an enterprise income tax on its corporate income; then it distributes its after-tax profits as dividends to the investors who pay income tax on those dividends. 

Company Limited by Shares

A company limited by shares requires at least 2 to 200 investors, who must be Chinese citizens. Usually, the investors have no personal liability. A company limited by shares is taxed on its earnings at a corporate level and investors are taxed on any distributed dividends. 

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Partnership Enterprise

A partnership enterprise requires a minimum of 2 investors, up to 50 investors for limited partnership if not specified by law. The general partners have unlimited joint liability for the obligations of the partnership while limited partners have liability for the obligations of the partnership to the extent of their capital contributions.

Human Resources

In China, the types of employment relationships are:

  • Fixed-term labor contracts
  • Labor contracts without a fixed term
  • Labor contracts that conclude at the completion of specific tasks

A formal employment agreement is required to establish an employment relationship under China’s Labor Contract Law. A part-time employee who works only 24 total hours per week and four average hours per day, is subject to various obligations and may be hired under a verbal contract.

Employees are entitled to the following statutory national holidays:

  • January 1 – New Year’s Day 
  • January 2 – New Year’s Holiday 
  • January 3 – New Year’s Holiday 
  • February 11 – Spring Festival Eve 
  • February 12 – Chinese New Year 
  • February 13 – Spring Festival Golden Week Holiday 
  • February 14 – Spring Festival Golden Week Holiday 
  • February 15 – Spring Festival Golden Week Holiday 
  • February 16 – Spring Festival Golden Week Holiday 
  • February 17 – Spring Festival Golden Week Holiday 
  • March 8 – International Women’s Day 
  • April 3 – Qing Ming Jie Holiday 
  • April 4 – Qing Ming Jie Holiday 
  • April 5 – Qing Ming Jie 
  • May 1 – Labour Day 
  • May 2 – Labour Day Holiday
  • May 3 – Labour Day Holiday 
  • May 4 – Labour Day Holiday 
  • May 4 – Youth Day 
  • May 5 – Labour Day Holiday 
  • June 1 – Children’s Day 
  • June 14 – Dragon Boat Festival 
  • August 1 – Army Day 
  • September 21 – Mid-Autumn Festival 
  • October 1 – National Day 
  • October 2 – National Day Golden Week Holiday 
  • October 3 – National Day Golden Week Holiday 
  • October 4 – National Day Golden Week Holiday 
  • October 5 – National Day Golden Week Holiday 
  • October 6 – National Day Golden Week Holiday 
  • October 7 – National Day Golden Week Holiday

Payroll

Salaries are paid at least once a month and the exact payment dates are usually stipulated in employment agreements.

Accounting

The accounting standards are China Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

Tax & Compliance

Corporate Tax

The corporate tax rate in China is 25%.

Value Added Tax (VAT)

The standard VAT rate is 13% for most taxable goods and services.

Data Privacy

According to the Regulations on Employment Services and Employment Management, employees must provide consent before their data is used.  

The country recently passed PRC Cyber Security Law. This law states that before collecting any personal information about a user, a network operator must mention the purpose and use of the data collection.

Anti-Bribery & Anti-Corruption Law

The Criminal Code and the PRC Criminal Code regulate the bribery of public officials. Penalties (for individuals and legal entities) include imprisonment for up to 10 years, confiscation of assets resulting from bribes, and additional fiscal penalty on the company and officials. 

The Criminal Code and the PRC Anti-Unfair Competition Law (AUCL) govern private bribery. Penalties (for individuals and legal entities) include imprisonment up to 10 years and additional criminal penalties imposed on the company and officials.