Trading Company Setup in China: Licensing and Import-Export Rights

The trading company setup in China has become more straightforward on paper and more demanding in practice. Foreign investors no longer need a separate foreign trade operator filing, and wholesale and distribution generally sit outside the foreign investment negative list. But a workable business scope, customs registration, product-specific licensing, and the export refund rules introduced with the new VAT Law now determine how quickly a new entity can actually move goods.

China remains the world’s largest goods trader, and the import side is where the momentum sits. According to the General Administration of Customs, foreign trade reached RMB 25.47 trillion (around US$3.75 trillion) in the first half of 2026, up 16.9 percent year on year. Imports grew 22.1 percent, while exports increased 13.4 percent, underscoring China’s continued importance as both a consumer market and a global manufacturing and sourcing hub.

For foreign investors, establishing a trading company in China can support a range of objectives, from importing products for domestic distribution and e-commerce sales to sourcing, exporting, and managing regional supply chains. A locally incorporated entity can strengthen operational control, facilitate customs and tax administration, enhance relationships with suppliers and customers, and enable companies to conduct trade in their own name.

This guide covers which entity to use, how business scope determines what you can trade, what import-export rights actually involve in 2026, the licences that apply to specific goods, and the tax and compliance obligations that follow.

Which entity should you use to trade in China?

Most foreign investors trading goods in China use a wholly foreign-owned enterprise, structured (WFOE) as what practitioners still call a foreign-invested commercial enterprise (FICE). It is a limited liability company whose registered scope covers wholesale, retail, commission agency, or import and export.

Two points matter before you file.

• Trading is not a restricted sector: Wholesale and retail distribution do not generally appear on the foreign investment negative list (except for tobacco-related products), so a foreign investor can ordinarily hold 100 percent of the trading entity. Restrictions that remain are product-specific rather than sector-wide, and they cover areas such as tobacco, publications distribution, and online sales of pharmaceuticals and medical devices. Companies should review applicable industry-specific licensing requirements before assuming a product can be freely traded in China.
• Registered capital is a commercial decision with a legal deadline: There is no statutory minimum for a trading company, but the figure should be credible against your first-year purchasing, customs, and working capital needs, because banks and customs both read it. Under the revised Company Law, shareholders must pay in subscribed capital within five years of incorporation, so an inflated figure creates a funding obligation rather than an impression of substance.

A representative office is not an alternative here. It cannot invoice, import in its own name, or hold import-export rights, which rules it out for any business that needs to move or sell goods.

Why does business scope matter more than the licence itself?

Business scope (经营范围) is the single most consequential drafting decision in a trading company setup. It appears on the business licence, and it defines the boundary of what the company may lawfully do. Customs, the tax bureau, and your bank all read it.

For a trading entity, the scope normally needs to cover some combination of the following:

• Wholesale and retail: These are separate activities. Retail permits sales to end consumers, including online, and is often overlooked by companies that later decide to open a store or a domestic e-commerce channel.
• Import and export of goods and technologies: Including this wording in the business scope enables the company to conduct import and export activities and complete the necessary customs, foreign exchange, and other registrations. Without it, the company cannot register with customs as a consignor or consignee.
• Commission agency: Relevant if you will act for the group rather than buying and reselling on your own account.
• Product categories: Some categories must be named, and regulated goods such as food, cosmetics, medical devices, and alcohol trigger additional permits tied to the scope.

Amending scope after registration means a change filing with the State Administration for Market Regulation, updated articles of association, and, in practice, a wait before customs and tax records catch up. The common failure is drafting narrowly around the first product line, then needing an amendment before the second one can ship. It is cheaper to include reasonably foreseeable categories at the outset than to amend twice in the first year.

How do you obtain import-export rights in 2026?

This is where much of the guidance still circulating online is out of date. Import-export rights are no longer granted by a standalone permit.

On 30 December 2022, the National People’s Congress amended the Foreign Trade Law to abolish the foreign trade operator record-filing requirement, and local commerce departments stopped processing those filings from the start of 2023. The revised Foreign Trade Law that took effect on 1 March 2026 did not reinstate it. Applicants no longer need to produce a foreign trade operator filing to obtain import or export licences, technology contract registrations, or quota allocations.

What enables import-export is a sequence of registrations rather than a single approval:

1. Business licence with trade scope: The scope must include import and export of goods, or of technologies, as applicable. This is the foundation for everything that follows.
2. Customs registration: The company registers with the General Administration of Customs as a consignor and consignee of imported and exported goods, and receives a customs registration code tied to its unified social credit code. This is what allows declarations to be filed in the company’s own name.
3. China Electronic Port and Single Window registration: The company activates access to the China Electronic Port system and establishes an account on the China International Trade Single Window platform. Most customs declarations and related trade administration procedures are conducted through these systems.
4. Foreign exchange registration and bank set-up: The company establishes the necessary foreign exchange arrangements through its designated bank for cross-border trade settlements, import payments, and export receipts.
5. VAT general taxpayer status and export refund registration: General taxpayer status enables the company to issue VAT special invoices and claim input VAT credits, with applicable VAT rates depending on the transaction. Exporters then register for refunds separately.

Sequencing is critical. Customs registration generally follows company incorporation and tax registration, while Electronic Port and Single Window activation may require customs registration to be completed first. Processing times vary by location and case complexity, so businesses should confirm local timelines before scheduling their first shipment. Plan the first arrival against the customs code, not the business licence.

Which goods need an import or export licence?

Company-level trade rights and goods-level licensing are separate questions. Holding import-export rights does not entitle a company to move controlled goods. According to China Briefing’s analysis of the 2026 licensing regime, four tracks run in parallel, administered by the Ministry of Commerce (MOFCOM) and the customs administration:

Beyond these catalogues, regulated consumer goods carry their own approvals. Imported food requires overseas manufacturer registration with customs and an importer filing; cosmetics and medical devices require registration or filing with the National Medical Products Administration (NMPA). These run on their own timelines, and for food, cosmetics, and medical devices, they can extend a setup that would otherwise take two to three months considerably further.

What tax obligations apply to a trading company?

Three tax positions shape the economics of a trading entity.

• Import VAT and duty: Both are assessed at the border on the customs value. Import VAT is generally 13 percent for goods, recoverable as input VAT once the company holds general taxpayer status. Duty rates vary by HS code, which makes classification a pricing question rather than a clerical one.
• Domestic VAT: Sales within China carry output VAT, ordinarily at 13 percent for goods. The new VAT Law took effect on 1 January 2026, consolidating rules previously spread across regulations and circulars.
• Export refunds: Where the company exports, input VAT may be refunded. The framework was replaced with effect from 1 January 2026 by State Taxation Administration Announcement No. 5 of 2026, which superseded the 2012 measures and broadened the scope from goods and services to export businesses generally, with cross-border taxable services now expressly covered. Refund rates remain product-specific, and some are being withdrawn: photovoltaic products lost export refunds from 1 April 2026, and battery product refunds fall to 6 percent before ending entirely from 1 January 2027.

Corporate income tax is 25 percent as standard. Preferential rates apply in certain zones, but they are tied to qualifying activity rather than to trading status, so they should not be assumed at the modelling stage.

What changed under the revised Foreign Trade Law?

The revised Foreign Trade Law was adopted on 27 December 2025 and took effect on 1 March 2026. It expands to 11 chapters and shifts the regulatory emphasis from market access toward operational conduct.

Three areas matter for a trading company:

• Intellectual property: The law introduces dedicated provisions on trade-related intellectual property and expects operators to strengthen their compliance and risk-response capability. For a distribution business handling branded goods, this raises the standard on supplier warranties and provenance records.
• Trade compliance and documentation: The revised Foreign Trade Law places greater emphasis on compliance and risk management, but it does not establish a standalone supply-chain due diligence regime comparable, for instance, to the EU CSDDD. In practice, companies should expect closer scrutiny of documentation and traceability for traded goods where existing obligations apply, particularly licensing, export controls and intellectual property.
• Enforcement reach: The revised law expands the enforcement tools available to authorities for addressing trade-related violations, which increases the potential consequences of classification or documentation errors.

The practical effect is that compliance has moved from an administrative filing at setup to an ongoing operational function. That is a change in where the work sits, not in whether foreign companies can trade.

How should you prepare?

1. Screen your product list before drafting anything: Check each HS code against the restricted, automatic licensing, and dual-use catalogues, and identify any that require NMPA or customs product registration. This determines both your timeline and your scope wording.
2. Draft business scope around 24 months of plans, not the first order: Include wholesale and retail if both are foreseeable, name the product categories you expect to handle, and confirm the wording with your registration agent before filing rather than after.
3. Set registered capital against your five-year funding plan: Size it to first-year purchasing and working capital, and remember the paid-in deadline under the revised Company Law.
4. Sequence customs registration ahead of your first shipment: Complete customs registration before scheduling your first shipment and allow sufficient time for all related registration and filing procedures. Plan your first shipment based on the availability of the customs registration and import/export credentials, rather than solely on the incorporation date.
5. Apply for general taxpayer status early: Consider applying for general taxpayer status early if you expect significant input VAT or B2B sales. General taxpayers can deduct eligible input VAT and issue VAT special invoices, which can be important for customer relationships and tax efficiency.
6. Review your export refund position against the 2026 rules: If you will export, confirm the current refund rate for each product and check whether it is scheduled to change. Update internal procedures to the Announcement No. 5 framework.
7. Build supplier and provenance documentation from the first shipment: The Foreign Trade Law’s intellectual property and supply-chain provisions assume records exist. Retrofitting them after a customs query is considerably harder.

8. Confirm product-specific compliance requirements before committing to delivery dates: Certain products may require import licences, product registrations, certification, inspection, quarantine clearance, labelling compliance, or other regulatory approvals. Identifying these requirements early helps avoid customs delays and unexpected costs.

Don’t confuse trading rights with distribution rights

A company with import-export rights can bring goods into China and sell them. It does not automatically follow that it can be distributed in every channel or for every product.

Retail sales to consumers require retail in the business scope, and online sales may require an Internet Content Provider (ICP) filing for the platform. Franchising has its own record-filing requirement with MOFCOM. Direct selling is separately licensed. And some categories may require additional licences, filings, or regulatory approvals, such as tobacco, pharmaceuticals and medical devices, and publication.

The question to ask is not only whether you can import a product, but through which channels you can lawfully sell it once it has cleared.

How Dezan Shira & Associates can help

Dezan Shira & Associates supports foreign investors across the full process, from entity structuring and business scope drafting to company registration, customs and foreign exchange registration, general taxpayer applications, and export refund set-up. Our teams also advise on product licensing requirements, import and export compliance, and the trade-related obligations introduced by the revised Foreign Trade Law. With offices across mainland China, we help clients align the regulatory timeline with their commercial one. Contact our local team for further information.