China WFOE Incorporation in Shanghai

The company's registered capital must be used for the company's day-to-day operating costs, such as paying for goodscosts, to pay accountants, to pay for the services of TKEG Expat.

The Companies Act of the People’s Republic of China establishes a minimum authorized capital of 30,000 CNY for limited liability companies, and 100,000 RMB for limited liability companies with a single founder.

To determine the minimum authorized capital of an enterprise with 100% foreign investment, it is necessary to determine the place of registration scope of activity and, before registration, find out the position of the local authorities of the Ministry of Commerce. This will allow you to indicate in the package of documents submitted for approval the figure that suits the government agencies. For example, in Beijing, for a trading company with foreign investment, the minimum authorized capital is 300,000 CNY, and for a consulting company, 200,000 CNY.

The smallest authorized capital is needed to register a consulting company since its creation requires minimal investment. Such a company with 100% foreign capital can be approved with the amount of the authorized capital close to the minimum.

There are industries where the minimum authorized capital for enterprises with foreign investment is established by law. For example, the transport mentioned above and forwarding companies with foreign capital must have a registered capital of at least 5 million CNY (by 11.12.2005 at least 1 million US dollars).

The authorized capital can be paid in one payment in full, or it can be paid in installments within two years from the date of creation of the company (obtaining a certificate of the right to conduct business – a certificate of state registration), when making the authorized capital in parts, the first installment must be at least 20 %. The authorized capital can be contributed in cash, property and intangible assets, however, at least 30% of the amount of the authorized capital must be paid in cash.

In addition to the authorized capital, the legislation of the PRC in relation to enterprises with foreign investment operates with the concept of “total investment”. The total investment is the amount that the investor (s) can invest in business development in China, as opposed to the authorized capital, which he is obliged to invest. It is evident that the total volume of investments can be either more than the authorized capital, or coincide with it. The difference between the total investment and the amount of the authorized capital is the maximum loan amount that an investor can provide to his subsidiary in China. These two values are related by a certain ratio, which changes with the growth of capital investments. Thus, with a total investment of no more than USD 3 million, the authorized capital must be at least 7/10 of the total investment.

The short answer is yes. Actually, the government of China encourages foreigner investors to do business in China.