Setting up a Sole Trader in China

Setting up a Sole Trader in China

Updated on Tuesday 31st January 2023

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Setting-up-a-Sole-Trader-in-China.jpgThe sole trader is a business form that is convenient for small companies that are run by a single individual. This small private company is simple to set up and it is a popular form of business registration, especially for certain businesses like restaurants or shops.
Our Chinese lawyers can help you understand the particularities of a sole trader in China and register your small private company. 

The particularities of a sole trader in China

A Chinese sole trader must be owned by a Chinese national. As the name implies, it is owned by a single individual who bears complete liability for the small private company. Foreign investors who want to open a small enterprise in China will need to find a Chinese partner. The registration process is likely to be faster, if you are married in China to a Chinese national and wish to start a business.
Depending on your chosen business field, you will not only have to register the sole trader, but will also need special permits and licenses for certain types of businesses, like a restaurant. Our Chinese lawyers are able to help you obtain the necessary permits from the relevant Chinese authorities. They can also assist you if you are willing to get a Chinese residence permit. But you should know about these facts beforehand. Aliens who have been given permanent residency must stay in China for an annual total of more than three months. They shall seek permission from the public security administration of the provinces, autonomous regions, or municipalities directly under the Central Government where they have their permanent abode if they are unable to fulfill that criterion owing to specific practical reasons. However, they should only spend a maximum of one year in China throughout five years.  
If you are interested in applying for Chinese citizenship, you are welcome to get in touch with our immigration lawyers. Please keep in mind, a child born in a nation where at least one of the parents is a Chinese citizen. A kid born abroad whose parents have settled in another country and the child has obtained the nationality of the parents' new country is not regarded as a PRC citizen.

Other business options in China

China is a popular business destination because of its large market and valuable workforce. Although different regulations apply to foreigners who want to invest in China, there are some business forms that allow full foreign ownership. The WOFE (Wholly Owned Foreign Enterprise) and the Registered Office are two convenient options for those interested in opening a company in China.
Although the sole trader has its advantages, like smaller set-up costs and lower maintenance costs, a Chinese company gives the investor protection in case of bankruptcy, because his or her personal assets are separate from the company assets. 
Before engaging in business activities with a Chinese company, you should require a copy of their business licence in order to be able to identify the type of company you are dealing with. For this purpose, our Chinese lawyers can help you with a company due diligence verification.
For more information about the types of companies in this country, you can contact our Chinese law firm.