2. What licences or approval must I obtain to run a small or medium-sized business in Mainland China?
The most common licences or approval that must be obtained from the Mainland authorities are as follows.
- The approval of the State Administration for Industry and Commerce (SAIC) or relevant local administration of industry and commerce must be obtained for the name that is chosen for the foreign investment enterprise (FIE). Please note that all formal foreign investment in Mainland China , including those of Hong Kong companies and individuals, are called "foreign investment enterprises".
- The approval of the Ministry of Commerce of the PRC or relevant local department of commerce must be obtained in respect of the investors and their respective amount and mode of capital contribution, the total amount of investment and registered capital, the scope of business, the joint venture contract (for Equity Joint Ventures or Cooperative Joint Ventures), the articles of association or by-laws, the business operation period and the category of company to be established.
- A business licence will be issued after successful registration with the SAIC or relevant local administration of industry and commerce.
- Special licences must also be sought if the FIE is to engage in certain industries or sectors (e.g. training, serving food and beverages, selling liquor or tobacco).
- Following China 's accession to the World Trade Organisation (WTO), all types of business organisations in Mainland China , including sole proprietorships and foreign companies that are not registered in China , are gradually allowed to import and export most types of goods into and out of the Mainland. Foreign investors should make themselves familiar with the import and export customs declaration system and customs clearance procedures. If they conduct import and export business in the Mainland, they must seek an Export Quota Certificate and an Import or Export License from the Export Quotas Department and the Import and Export Licenses Department, respectively, of the Ministry of Commerce of the PRC.
- Hong Kong investors, who wish to establish a foreign investment enterprise in Mainland China in one of the service sectors that are covered by the Closer Economic Partnership Arrangement (CEPA), will have their applications for establishment processed and approved by the relevant department of the State Council or other local Chinese government authorities in accordance with the principles and procedures that are set out in the CEPA. However, a Hong Kong Service Supplier (HKSS) Certificate from the Trade and Industry Department of the Hong Kong SAR Government must first be obtained before approaching the Mainland authorities. Please visit the website of the Trade and Industry Department for more details.
All FIEs are required to have their accounts audited annually by a PRC-qualified accountant, and are subject to an annual joint inspection by the relevant local department that oversees foreign trade and economic cooperation, finance, customs, national and local tax, industry and commerce and foreign exchange control.