Le Rong
Legal Director
Article
4
Recent reforms have occurred to make it simpler for companies, including foreign invested companies, to incorporate businesses in China.
Over the last few years, significant steps have been taken to make it simpler for companies, including foreign invested companies, to incorporate businesses in China. In fact, the Chinese government has cut the national average time it takes to establish a company from 33 days to 23 days in the last 5 years, thanks to major reforms of the company registration procedures. Some of these reforms included:
It is even quicker to incorporate businesses in the 11 free trade zones set up across China, where there are fewer regulatory restrictions and expedited approval procedures.
These developments were followed by a Chinese government announcement on 17 May 2018 about additional steps to be taken to further simplify the business incorporation process in China, with a commitment to cut the company incorporation timeline to just 5 days. This would be better than the average time of 8.5 days seen in OECD countries.
The government has called on Chinese company registration authorities at all levels to achieve this by:
It is too early to tell whether these potentially significant developments will be delivered to the extent envisaged and within the expected timelines. However, on paper, these are very useful for foreign companies wishing to set up in China because the incorporation remains a burdensome task. The developments send another message that the Chinese government wants foreign businesses to establish themselves in China and we are hopeful that these progressive steps forward will be shortly seen in, at least, first-tier and second-tier Chinese cities. We will keep readers updated about these reforms and other related developments.
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