Starting a Business in Shanghai
Updated: Oct 6, 2021
Business in China ©️ Geralt / Public Domain / Pixabay
So, you want to open a company in Shanghai? Good choice. Shanghai is China’s most populous city and the best place in China to find talent. The city has a well-developed business environment that has much to offer a new company. This article will cover four topics. First, why you may consider Shanghai for a place to register your company. Second, a roadmap of the registration process from my own firsthand account. Third, how taxation and administration are handled after the company has been registered. Fourth, what alternatives exist to self-registration.
Shanghai boasts a number of incubators, accelerators, venture capital firms, and business organizations that are dedicated to fostering, mentoring, and funding promising startups and SMEs. As a mature business destination, talent is in high supply and there are always opportunities to engage in international business communities. Shanghai is unique among Chinese cities because along with a few others, it belongs to the so-called “provincial level cities”. This means that the city is run more like a province than a single city. This quirk allows the city to run efficiently through decentralization of administration, and it also means that any administrative process will vary depending on the district you are in. The variance of policies between districts in Shanghai will look more like the variance between two cities in different provinces! This being said, don’t be intimidated; the next section will guide you through a generalized process which will help you build a framework.
For our roadmap, I will refer to my experience in Yangpu district in Shanghai. This process will involve at least two people, the owner of the company and the managing director. Two names are needed for the company registration. Contrary to what you may have heard, opening a company in Shanghai is free. You will need to make two purchases before you are able to have a company, however. First is your company chop, a set of official seals that you use to designate official company documents. Second, is the business address. In Shanghai you need a business address that is registered as a corporate space, not residential. Unfortunately, this means no registering your home address as your corporate office, and no renting a mailbox or PO box either. The bright side is, Shanghai has a number of affordable coworking spaces and incubators that rent space to startups, but more on that later.
There are 5 steps before heading to the office, all of which are online.:
1. Register on an app called “登记注册身份验证” (registration and identity verification) and select a deadline for registering the company.
2. Register “公司章程” (company policy and procedures)
3. Register “股东决定” (appointment decision on company managers)
4. Sign and stamp on “租赁协议” (office leasing contract)
5. Fill out information and sign on “公司登记（备案）申请书” (company registration (for record keeping) application).
Once this information is all submitted, you can proceed to the district business registration office. For our example, let’s use the Yangpu office location - 上海市杨浦区怀德路600号. Make sure to bring your passport, valid visa, and your best pen. When you arrive, it will be time to sign all the documents. After the successful submission in person, you will be asked to purchase the company chop. You will receive a few things from the office. Here is a list:
1. 营业执照 business license
2. 营业执照副本 copy of business license
3. 公章 company stamp
4. 法人章 legal representative stamp
5. 财务章 finance stamp
6. 发票专用章 invoice stamp
You can also apply for a digital version of the business license through the district administration WeChat Mini-Program.
Congratulations, you have registered your very own company!
So you have a company, now what? Taxes, that’s what. Part of having a registered company is the ability to issue official invoices (fapiao), but the registration process to issue a valid fapiao is not handled at the district business administration office. For that, you will need to go to the district’s tax office. To continue on with our example, the address of the Yangpu district tax office is 上海市杨浦区黄兴路402号. Once you have your business license and company chop you can take them to the tax office to register for the fapiao.
All subsequent business administration is handled by the district you registered the company in. For example, if you register your company in Yangpu, you must return to the same office for future administration needs. Consider which district would be most convenient for you when selecting where to register your business.
Taxes! Your taxes are due in the district you registered in -
Business administration continues to be done in that district
This guide has covered self-registration, but there are alternatives. As previously mentioned, Shanghai is home to a well-established business community. Consultants will handle the entire registration process for you for a fee. Incubators and accelerators will offer desk space that startups can rent for the business address and many also handle company registration. If registering a company in Shanghai is not realistic for you, it is possible to find a Chinese company partner to handle the administration and taxation for you, while you manage your operation. Many Chinese universities assist their students in company registration after graduation, with some even having dedicated colleges and offices for this purpose.
Blake Jeanniton is an economics and business researcher with a focus on EU-US-China trade relationships. He earned a Master’s degree from Fudan University a top 50 globally ranked institution. Blake is the founder of River Insights, an international marketing and market research firm, based in China. You can find him on LinkedIn.
The opinions expressed here are those of the writers and do not represent the views of European Guanxi.