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Writing the business scope for your Chinese business

On Behalf of | Apr 10, 2022 | Business Law

If you are like many company owners, you recognize the benefits of doing business in China, such as cost reduction in a country with a strong infrastructure.

However, setting up a business in China involves several government departments and complicated laws. Due to the strict business laws and the specific tax treatment of different business types, you need to have a clearly defined scope when you apply for your license.

Defining your scope

Many business activities require additional registration and capital investments as well as proven professional experience. You need to specify the product or products you plan to manufacture, the services you will provide and the number of employees you plan to hire.

Gaining business approval

In addition, although a government clerk in a local business license issuing department approves your license, you still need to have it approved by the Chinese tax bureau. These officials pay more attention to the specifics of your operations and will not approve your license if any of your scope is ambiguous, disingenuous or open to interpretation.

Adjusting your scope

Your scope should be rewritten every four years. However, you need to immediately update the Chinese government if your scope changes. Submit your original license and proof that you have met any additional requirements, including capital investments, with your renewed scope.

Operating outside your scope

If you choose to operate outside the scope of your business in China, you can face several consequences, including fines and losing your licensing.

If your business scope is not approved, you could face multiple delays and rejections. However, if you take the time to clearly define your business activities and fill out the rest of your paperwork, you could open your company in as little as six weeks.