China maintains a complex permitting and licensing regime that foreign businesses must comply with. All foreign companies are required to obtain a business license in order to invest in and operate commercially in China. Beyond this, various industry-specific administrative licenses may also be required before a foreign company can do business in China. While administrative licensing is common worldwide, China’s extensive, complex, and often onerous licensing system at the central, provincial, and municipal government levels can result in significant delays, added costs, and lost revenue.
Business licenses are issued by the State Administration for Market Regulation (SAMR). To apply for a license, foreign companies must supply Chinese regulators with a wide range of information about their company including name, registration number, legal representative, business scope, registered capital, registered address, operating status, and date of establishment, etc. A business license is necessary for conducting business in China and is required in order to open a bank account, sign contracts, and obtain other permits and licenses. Besides a basic business license, many companies will also need to obtain more specific licenses that permit them to engage in certain activities within the PRC that relate to their business. Which ministry is responsible for overseeing and issuing these licenses varies by industry but may include the Ministry of Commerce (MOFCOM), the Ministry of Industry and Information Technology (MIIT), and the Ministry of Finance (MOF). Activities requiring special licenses and permits include (but are not limited to):
- Import and export business license
- Pharmaceutical business license
- Construction license and permit
- Value added telecom services (VATS) license
- Food operation/distribution license
- Liquor retail permit/wine license
- Internet Content Provider (ICP) License
- Fire Permit
The PRC government maintains numerous policies and practices that limit U.S. service providers’ ability to access China’s market. For more information on some of these restrictions, see USTR’s 2024 Annual Report on China’s WTO Compliance. However, some important examples include legal services and financial services.
Legal Services: The legal industry in China is restricted, meaning wholly foreign-owned enterprises (WFOEs) and Sino-foreign joint ventures (JVs) are prohibited from entering the legal market in China. To operate in China, foreign law firms can register a legal representative office (LRO). However, LROs are subject to a number of restrictions on how they operate and the activities they can engage in. For example, LROs are prohibited from directly employing PRC citizens and instead must hire local employees through a third party. LRO’s also generally cannot invest in or manage a Chinese law firm or send staff to a Chinese law firm to provide legal services. Additional information on the procedures for establishing a legal practice in China can be found on the Ministry of Justice’s website here.
Financial Services: Most financial services companies need to obtain specific licenses in addition to a business license. However, the licenses needed, and the issuing ministries vary depending on the business type—for example banks and insurance companies have different licensing requirements. Financial services providers must also meet various thresholds—insurance brokers must demonstrate 30 consecutive years of operating history, for instance—in order to establish a business in China. These thresholds and requirements also depend on the specific business type.