To register any business, China government requires that you indicate the total amount of capital you will be investing into your business. Investors can invest this registered capital in a number of tranches, which can spread over a couple of years. In most cases, many investors ask about the least required amount of registered capital that they can invest.
We intend to support your goal of starting a business successfully in China. We are going to do so by providing you with the general figures that are closely related to the cost of setting up your business in this country.
The cost of registering a Joint Venture or Wholly Foreign Owned Entity for foreigners, usually differ, depending on the service provider. You can get a local service provider that offers relatively low fees, but will still prepare your documents quickly. You can also work with an international legal firm. Averagely, service providers will charge you about 44.500 RMB for assisting you with the registration process. The services generally include picking a name and opening an account with the local bank. The registration process takes about 3 to 9 months.
Cost of hiring stuff
Employment costs differ from region to region. For example, you will find that hiring employees in Guiyang will not cost the same as hiring employees in Shanghai. When you are considering the salary or wage of a professional in a certain region, you should always be guided by the average salary for tat area.
You should have realistic views on wages so that you don’t seriously underpay or overpay. Taxes, just like averages wages, are different in each region. It is important to have good understanding of these differences. Such knowledge will help you choose which district, city, or province you should start your business in. It will also help you know how much you should spend on wages.
The cost of office rent
Before renting any office in China for your business, you need to do a thorough research. The rental costs have been rising for the last 3 decades in cities like Shanghai, Beijing, and Shenzhen. Other areas within China will offer different rent prices.
Small offices are also available and they can function as some virtual offices. But you cannot rent a virtual office in China because that is already illegal. You should rent your business office for you to start issuing invoices. You must rent an office and have an address for it
Bookkeeping requirements need to be managed properly. This costs money. You can outsource the services of another company to handle the books of your business and to explain to you all the requirements. Bookkeeping errors can be costly as they may have very serious consequences.
The costs for managing bookkeeping usually vary. You may find a local party that will offer you bookkeeping management at a considerably low cost. Some international parties may also charge you low prices for the same services.
Providing a specific overview of the total cost of setting up a company in China can be hard. There are several specific details related to the kind of business you want to start. Business type, the location, the number of employers required, and other strategic choices that you want to make are all going to affect the overall cost of setting up a business.
Overall, the total costs of an employee, bookkeeping, and office rent will not be less than 500.000 RMB in one year. In case you are looking into two years of running a business before breaking even, your registered capital for be about 1.000.000 RMB. This should be your registered capital for a Wholly Foreign Owned Entity. This amount will ensure that the process of obtaining a certificate of registration goes smoothly without any problem. It is important to state here that you don’t have to inject the entire registered capital into your business upon registration. The declared capital basically represents what amount of money you expect to generate within a 29-year period.
Years back, the government had a regulation in place that specified the minimum and maximum amount of registered capital and starting capital needed for a Wholly Foreign Owned Entity for investors from other countries. Fortunately, this regulation has been withdrawn. The government did this as a step towards motivating foreign investors to start new business in China. This was an action for creating a level playing ground between foreign and local entities.