China’s Business Registration Process to Become Easier, Cheaper Following October Digitalization
By Weining Hu
Companies that would like to setup in China will benefit from a more efficient corporate registration process by the end of October this year. The State Administration for Industry and Commerce (SAIC) released an opinion (“the Opinion”) on April 11 that outlined its digitization effort, which will entail the construction of a nationwide digitized corporate registration platform and a new electronic business license.
This reform will improve the turnaround-time and streamline the registration workflow for all types of companies. The Beijing Administration of Industry and Commerce (AIC) online system is currently the only platform that allows foreign invested companies (FIEs) to register their business online, but more regions of China will follow suit once a national model is ready to set forth.
New market entrants who plan to register their startups in China should understand the new regulatory changes governing setup procedures.
Online company registration available by October
According to the Opinion, the SAIC will work to optimize the online registration process through streamlining application steps and the content of application materials. The new electronic registration program allows entrepreneurs to register an account online, upload scanned supporting documents, and authorize e-signatures when submitting the application.
The SAIC will also standardize the design of an electronic business license, including formatting and listed credentials. A series of management protocols for issuing an electronic license are also under drafting by the SAIC. After these nationwide protocols are defined, the SAIC will require sub-national registrars to develop their local systems in alignment with the national standards.
In an April 19 announcement that followed the Opinion, the SAIC clarified that both provincial level and municipal level AICs will need to open their respective enterprise name pools. This will further optimize the online registration process: all company registration applicants will be able to use the online name-query platform to check if another business has registered the same company name.
Digital registration pilot programs shed light on reform
Before the SAIC announced the countrywide reform, it ran several successful digital registration pilot programs for Chinese entrepreneurs in different parts of the country, including the capital Beijing and Jiangsu province, which is near to Shanghai. The initial stage of Beijing’s pilot program was only open to applicants from domestic high-tech companies in Haidian district. These pilot programs illustrate how the new registration process will make setup easier for new market entrants.
When registering a company with the local AIC, an applicant used to go through a time-consuming process that requires many rounds of online registration for different purposes and in-person application materials submission at the local AIC counters. Further, the old online registration system did not accept scanned supporting documents.
The new system will expand the functionality of the online system to process digital documents that used to be required at local AIC counters. Under the pilot program, applicants easily registered their business at their desktops without visiting local AICs, a paperless process that significantly saving time for entrepreneurs to focus on core business.
Scope for FIEs to expand
Recent changes have shown that further pilot programs began to implement necessary technical support to process registration applications from foreign invested companies.
Starting from April 19, Beijing AIC online registration system began to accept applications from FIEs. Since SAIC does not have adequate technology or resources to verify the identities of all foreigners, it requires an FIE to entrust a lawyer in China as a local agent to submit its business registration application online. The designated lawyer is responsible for filing the company’s basic information online and providing legal verification and endorsement for all key shareholders’ identities and accuracy of the application materials. Changzhou municipal in Jiangsu province have also just issued work guidance to expand the current pilot programs to include applications from foreign invested companies.
If these trials work well, the SAIC will implement the pilot model across all regions of China from October this year. The trend shows that more and more foreign companies in China will benefit from this digitization program as the reform spread out across all regions of China.
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