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Registering a startup in China is about to get easier and cheaper

Paul Bischoff
Paul Bischoff
6:00 pm on Oct 28, 2013

Cutting the red tapeChina will streamline its corporate registration system by scrapping the minimum capital requirement, according to Xinhua. The process will be streamlined to ease market access and encourage social investment.

This is good news for startups, which are often forced to work under the table due to a lack of registered capital. Being able to register their companies will make it easier to attract and hire employees, receive funding and loans, and work with existing corporations and state agencies.

A subscribed capital system will also be promoted to lower the cost of founding a company.

Requirements for websites that conduct business operations will also be relaxed, although the statement did not give specifics.

The government wants to make registered companies more transparent, as well. Annual audits of registered companies will be replaced with annual reports open to the public written by the companies themselves. Companies that “commit aberrant behaviors” will be made public.

The rule changes probably won’t affect foreign-owned enterprises.

On a local level

In Beijing, where “China’s Silicon Valley” is located, the registered capital requirements are often estimated to be up to RMB 500,000 ($82,000), possibly the highest in the country.

The local government here often tries to make things a bit easier on local startups. In its most recent move, internet-based financial startups such as P2P lending and crowd-financing services were offered lower rents and even cash rewards.

Removing the registered capital requirement could backfire in smaller cities, though. While second- and third-tier cities have similar requirements, they’re far lower than Shanghai and Beijing, luring much-needed SMEs to less progressive parts of China. Despite this, the statement says, “It is necessary that the measures be carried out across the board.”

(Source: Xinhua)

(Editing by Steven Millward)


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Have Your Say
  • hu

    is this only for chinese copanies?does it apply to wofoes?

  • gruntle

    “foreigners who want to register their startup for free will still require a Chinese citizen to own part of the company.”

    This is a total lie. This applies to domestic Chinese companies, has nothing to do with joint ventures.

  • Paul Bischoff

    @gruntle thanks for the clarification. fixed that bit.

  • gruntle

    @paul bischoff Ah, so you admit you are a total liar and that you invented “facts” to fit your narrative.

    You are a scumbag. Resign your job as a “journalist”. Immediately.

  • Vlad

    @gruntle

    There is no reason to be so offensive to Paul. If you’re so brave in expressing your “opinion”, why don’t you leave your real name? It’s one thing to have a different opinion, but that is completely different form being disrespectful and offensive like you.

  • Deirdra Reed

    Great article indeed!

    I’d like view this article via email, however, it does not appear to be an option. The only solution of course would be to “copy & paste.” Please let me know otherwise.

    Once again, great article and thanks for sharing!
    Cheers,
    Deirdra

  • http://www.dezshira.com Fabian Knopf

    These changes will only be relevant for domestic Investor. Foreign investors will not be able to benefit from these changes. From March this year, domestic investors already enjoy benefits of not having to contribute capital to their companies and even not registering a physical office location in the cities of Shenzhen and Zhuhai: http://www.fcpablog.com/blog/2013/3/8/shenzhen-and-zhuhai-roll-out-business-registration-reforms.html

    CNY 500,000 is the threshold in order to qualify for the General Value-Added Tax (VAT) Payer Status all across China and since the VAT reform kicked off in 2012, which moved formerly business tax (VAT) applicable services to VAT, this status becomes increasingly important for companies to achieve in order to provide proper invoices to customers and receive them in turn from their suppliers.
    So, in this regard CNY 500,000 has become somewhat of a minimum standard now, since district governments in the major cities are requiring even more now. CNY 1,000,000 is very common in the city centers.

  • David

    @gruntle… this should be forum for discussion, not derision or foul language.

    It’s easier to be polite than outright (c)rude.

    I agree with Vlad…why not reveal your real name?