Examining a Chinese Company Business License

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Part 1 in our series: Understanding Chinese Limited Companies

By Richard Hoffmann

Dec. 8 – Due diligence when conducting business in China should always be a prerequisite, and this is the case whether or not you are considering purchasing or selling to a Chinese company, or a more formal arrangement such as a joint venture. A Chinese company business license can provide a great deal of information about the company which can be checked off as follows:

Name of the legally responsible person
Is this the same individual you have been dealing with? If there are any disputes, you need to know who the legally responsible person is.

Company name and registered address
Does this match up with your own understanding? If not, why?

Scope of business
Companies in China are restricted in what they can do, and their activities must be fully identified in their scope of business. If you’re dealing with a company whose business scope does not include the projected service or goods, you may face sudden disruptions of supply or service later on.

Length of operations
Business licenses are granted for a period of years. Although unless the company has been in transgression of the law licenses are usually renewed, it pays to make sure you know when the Chinese business license is up for renewal, just in case.

Amount of Registered Capital
This amount counts as the limited liability of the company, so it is important you know what this is. It makes little sense to extend decent credit to an under-capitalized business. However, Chinese businessmen do not always fully pay this amount up, and further checks as to the Capital Verification Certificate also need to be carried out to ensure the liability amount has been met in full.

Foreign companies conducting business in China are advised to ask for a copy of the Chinese company business license to examine at the very basic level the details of their activities.

Richard Hoffmann is a senior legal associate with Dezan Shira & Associates and is based in Beijing. The firm has nine offices in mainland China and has been operating in Asia since 1992. Please contact Richard for advice on corporate establishment, contractual, or due diligence issues within China.

Example of a Chinese company business license

7 Responses

  • Vimall says:

    Dear Sir,
    We are a manufacturing company in India and we export all over the world. We are thinking of starting a trading company in Hongkong to do import / export business to all over the world. Our main area of import will be from India and they will be exported to Europe.

    Please let us know the procedure to start this office and which govt office should we approach.

    thanking you
    best regards
    Vimall

  • Hello Vimall,
    Please contact Dezan Shira & Associates’ business advisory services division for corporate establishment issues at info@dezshira.com.

    Regards,

  • Noorullah says:

    Dear hai.
    I m a Pakistani passport holder I want start a new business in china .
    And make a import export company pls give me comments on my company what I will do on first step for big visa and more law.
    Best regards.
    Noorullah khan

  • Noorullah says:

    It is ok add other was have some prublums
    Dear hai.
    I m a Pakistani passport holder I want start a new business in china .
    And make a import export company pls give me comments on my company what I will do on first step for big visa and more law.
    Best regards.
    Noorullah khan

  • Dear Noorullah, we’d need to learn more about what it is you want to do – however we have assisted several Pakistani clients in China. Please email to china@dezshira.com with details of where in China you wish to set up, and our pertinent regional office will get back to you. Thanks – Chris

  • Shayam Yadav says:

    Hi, Just would like to understand what is the difference in business licence and registration in china? Are they both same or different?

  • @Shayam Yadav: Registration usually refers to the legal administration process of getting a license. However in China the terms can be interchangeable so if someone refers to “their registration certificate” they may also mean their business license.
    Chris

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