How to Set Up an Entity in Shenzhen (China)

Shenzhen, often called China’s “Silicon Valley,” offers foreign companies an attractive entry point into the booming Chinese market. Setting up your own legal entity in Shenzhen grants direct access to China’s vast consumer base and supply chains, especially in tech and manufacturing hubs. The city’s status as a Special Economic Zone means a pro-business environment. In recent years, China has streamlined business registration with one-stop online systems, but the overall process remains bureaucratic. Key challenges include extensive paperwork, language barriers, and strict compliance requirements at every stage. Despite these hurdles, opening a Wholly Foreign-Owned Enterprise (WFOE) in Shenzhen gives you full autonomy and control over your operations in China.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

Entity Overview in China (Shenzhen)

In Shenzhen, foreign investors most commonly establish a Wholly Foreign-Owned Enterprise (WFOE) – an LLC structure allowing 100% foreign ownership. The general registration process for a WFOE involves obtaining a business license from local authorities and completing tax and social insurance registrations, often through a unified online system. Other entity forms (like joint ventures or representative offices) follow similar initial steps but have different requirements.

Step-by-Step Guide: How to Open an Entity in China (Shenzhen)

Step 1: Choose the Right Structure

In China, foreign businesses typically choose one of three structures:

• Wholly Foreign-Owned Enterprise (WFOE) – the most popular option. This is a limited liability company fully owned by the foreign investor(s). A WFOE offers maximum control over operations, the ability to invoice in RMB, and protection of intellectual property. Shenzhen is a hotspot for WFOEs, especially in tech, trading, and manufacturing.

• Joint Venture (JV) – a partnership between foreign and Chinese parties. JVs can be equity joint ventures or cooperative JVs, structured also as LLCs but with at least one local shareholder. JVs are less common.

• Representative Office (RO) – a liaison office of a foreign company, not a separate legal entity. ROs cannot engage in direct revenue-generating business, only in non-commercial activities like market research, networking, or supporting the parent company. It cannot sign contracts or hire staff directly (staff must be employed through a third-party agency).

Note: Branch offices of foreign companies are generally not available in China for most industries. Foreign firms enter via a WFOE (as a local subsidiary) or RO rather than registering a foreign branch.

Step 2: Verify Business Name Availability

Choosing a company name in China involves adhering to a standard format and getting pre-approval from the authorities. Your official Chinese name must include:

[Trade Name] + [Industry Descriptor] + [(Shenzhen)] + [Company Limited]

For example: ABCD Technologies (Shenzhen) Co., Ltd.

The name must be in Chinese characters (you can have an English name for branding, but it’s the Chinese name that is legally registered).

Before you incorporate, check that your desired name is not already taken by another business using the Shenzhen AMR (Administration for Market Regulation) online database. You can use the official Name Pre-Approval system to submit your proposed name. Typically, you’ll input 2–3 alternative names (all in Chinese). Shenzhen AMR usually issues a Name Reservation Notice within a few days.

Step 3: Prepare Incorporation Documents

With a reserved name, you can assemble the required documents for your company registration. All documentation must be provided in Chinese (or translated). In Shenzhen, the key incorporation documents include:

• Company Registration Application Form
  This is the official application (often called the “multiple certificates in one” registration form) for establishing a new enterprise.

• Articles of Association (AoA)
  The AoA is the constitutional document of your LLC. It outlines the company’s name, business scope, registered capital and contribution schedule, share structure, governance (directors, supervisors), and operational rules.

• Identification and Qualification Documents
  You must provide identification for all key parties:

  • Shareholder(s):
    • Individual investor: notarized copy of passport
    • Corporate shareholder: notarized and legalized copy of the parent company’s Certificate of Incorporation (or equivalent).
      These must be notarized in your home country and authenticated by the Chinese embassy/consulate
  • Legal Representative:
    A copy of the legal representative’s passport (or Chinese ID, if a PRC national). This is the person with legal signatory power for the company (often a director or executive you appoint; can be foreign or Chinese).
  • Directors, Supervisors, and Managers:
    Copies of ID/passports for each of these positions listed in the AoA. China’s Company Law requires at least one supervisor (who cannot be the same person as the legal rep or a director). Shenzhen does not require these roles to be locals – foreigners can occupy all positions.
  • Authorized Registered Agent/Contact:
    If you are using a local agent to handle the filing, you may need to submit an authorization letter and their ID. Additionally, Shenzhen requires designation of a “legal documents recipient” – an individual (with a China address) to receive official correspondence on the company’s behalf. Often, a company director or a hired corporate services firm fills this role.

• Proof of Registered Address
  You must have a business domicile in Shenzhen (a local address for the company). Typically, you provide a lease agreement for an office or facility. In places like Qianhai (a Shenzhen free trade zone), there are address hosting services if you don’t have a physical office.

• Additional Documents (if applicable)
  Depending on your business scope:

  • Regulated industries (e.g. food distribution, telecom, education) require prior approval or licenses from the competent authority.
  • If the shareholder is a corporate entity, a board resolution from the parent company approving the establishment of the Shenzhen subsidiary might be required.

Step 4: Register with Shenzhen Market Supervision Bureau

Obtaining a Business License (营业执照) to operate in Shenzhen is done through the Market Supervision and Regulation Bureau of Shenzhen Municipality (深圳市市场监督管理局), often just called the Shenzhen AMR.

Receive Your Business License

Upon approval, you will be issued a Business License for your new company. Since 2015, China uses a “five-in-one” unified business license system. This means the single license document also encompasses your tax registration, organization code, social insurance registration, and statistics registration. You do not need to separately apply for a tax registration certificate or organization code certificate. At this point, your company in Shenzhen is legally formed. However, there are a few immediate tasks to complete post-license:

• Obtain official company seals (chops):
  In China, company chops carry legal authority. After licensing, you should have your company seal (and other seals like finance seal, legal representative’s personal seal) made by a public security bureau-authorized vendor. In Shenzhen, this often can be done in a day or two. The main company chop is used to stamp contracts and documents, and is as legally binding as a signature. Register the seals with the public security bureau if required (some cities integrate this into the licensing process).

Step 5: Register for Tax and Social Security

Even though your business license includes a unified tax ID, you must activate your tax and social insurance registrations soon after incorporation. This ensures your company can start invoicing, hiring, and complying with local regulations.

Tax Registration

In Shenzhen, tax matters are handled by the Shenzhen Tax Service (part of the State Taxation Administration).

• Taxpayer Identification:
  Confirm that your Unified Social Credit Code is recognized in the tax system and obtain your electronic tax registration certificate.
• VAT Status:
  Determine if you will be a general VAT taxpayer or remain a small-scale taxpayer. Generally, if you expect sales above the threshold (CNY 5 million annually for most industries), you should register as a general VAT payer to be able to credit input VAT.
• Invoice (Fapiao) System:
  Apply for access to the fapiao system – official VAT invoices.
• Tax Filing Setup:
  The company will be set up on the tax bureau’s e-filing system. In Shenzhen, you may go to the tax bureau service hall in person to finalize this.
• Customs & Import–Export (if applicable):
  If your business involves importing/exporting, you’ll also register with Customs and obtain a customs registration number, and possibly register with SAFE (State Administration of Foreign Exchange) for trade-related foreign exchange accounts.

Social Insurance and Housing Provident Fund Registration

To hire employees in China, companies must enroll in the social security system. The five statutory social insurances (pension, medical, unemployment, work injury, maternity) plus the housing provident fund are managed locally.

• Submit your business license and contact info to the Shenzhen Social Insurance Bureau to set up your employer account. This will allow you to add employees and start contributing to social insurance for them.
• Similarly, register at the Shenzhen Housing Provident Fund Management Center for an employer account for the housing fund.

These registrations should be done within 30 days of establishing the company (or within 30 days of your first hire). Often, companies entrust a local HR agency or their payroll provider to handle the social insurance and housing fund setup. After registration, each month the company will need to report and contribute for any active employees.

Step 6: Open a Corporate Bank Account

Many foreign firms opt for a bank that is experienced with FDI (foreign direct investment) accounts. Popular choices include Bank of China, ICBC, or HSBC .

Account Types

You will typically open:

• RMB basic account (基本账户) – primary checking account for daily operations. Each company can have only one basic RMB account in China. It’s used to pay salaries, suppliers, taxes, and to withdraw cash.
• Capital contribution account (资金账户) – a special foreign currency account to receive the injection of your registered capital from abroad. This account is often temporary; once you convert the foreign currency to RMB and allocate the funds, you may not use it for other purposes.

KYC and Documentation

Opening a bank account in China is a detailed process. Banks are required to perform stringent Know-Your-Customer checks due to anti-money laundering rules. Generally, you will need:

• Business License (original and copies)
• ID of the legal representative (passport) – many banks require the legal rep to be physically present at account opening; some may allow a power of attorney
• Board resolution or bank account opening authorization letter
• Company chops (official seal and financial seal)
• Proof of address and contact info of the company

Timeline

Account opening can take anywhere from 1 to 4 weeks, depending on the bank’s internal approvals.

Step 7: Set Up Payroll and Employment Compliance

If you plan to hire employees in Shenzhen, you must ensure your payroll and HR practices comply with Chinese labor laws and local regulations.

Employer Registrations

When you hire staff, you must register them with social insurance and with the housing fund. In Shenzhen, monthly social insurance and housing fund filings (for contributions) are due by the 25th of the following month and are processed via the tax bureau.

Drafting Employment Contracts

China requires written employment contracts with all full-time employees, in Chinese. You should prepare a bilingual contract (Chinese being the governing version) that meets at least the minimum requirements of China’s Labor Contract Law. This includes specifying:

• Contract term (fixed or open-ended)
• Job role
• Work location (e.g., Shenzhen)
• Salary
• Working hours
• Social insurance
• Probation period (if any)

Ensure you include mandatory clauses like compliance with company rules and grounds for termination, aligned with PRC law. Have all employees sign the contract upon joining and give them a copy.

Payroll Setup

Many foreign SMEs use a local payroll service or accounting firm to calculate monthly wages, individual income tax (IIT) withholding, and social contributions. IIT must be filed monthly (by the 15th of the next month) for all employees’ withholdings.

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Post-Registration Obligations

After incorporation, companies in China must stay compliant with ongoing governance, tax, and employment laws. Key obligations include:

• Tax and financial reporting: File annual CIT (by May 31) and monthly VAT returns (by the 15th of the following month). Maintain books under Chinese GAAP and submit financial statements with tax filings. Fiscal year is calendar year (Jan 1 – Dec 31)
• Corporate registers and annual filings: Maintain current records of shareholders, directors, supervisors, and beneficial owners. Register changes with the Shenzhen AMR within statutory timeframes and submit the Annual Report by June 30 through the National Enterprise Credit Information system
• Compliance tracking: Use a compliance calendar or automated reminders to monitor tax, social security, and regulatory deadlines
• Licenses and renewals: Renew business licenses as required, maintain customs registrations and annual reconciliations
• Recordkeeping: Retain accounting, tax, HR, and corporate records, generally for ten years, and keep company books and meeting minutes securely at the registered office
• Employment law compliance: Update employment contracts as needed, track working hours and overtime limits, ensure timely social security and payroll tax payments, maintain mandatory insurance and safety compliance, protect employee data, and follow proper procedures for terminations

Taxes and Financial Considerations

• Corporate tax: Standard CIT rate is 25%, with reduced rates for qualified high-tech, small low-profit, or encouraged-industry enterprises. CIT is filed annually on a calendar-year basis.
• VAT: Standard VAT is 13% on most goods and many services.
• Payroll contributions: Employers must contribute to pension, medical, unemployment, work injury, maternity insurance, and the Housing Provident Fund; employees also contribute to pension, medical, unemployment, and the housing fund. Rates vary by scheme and are subject to wage caps. Contributions are reported and paid monthly
• Individual income tax: China uses a progressive tax rate for salaries ranging from 3% to 45%. Employers withhold monthly and file by the 15th of the following month
• Accounting standards: Companies follow PRC GAAP (CAS) in RMB and Chinese, aligned with IFRS. Books follow the calendar year, financial statements are prepared at least annually, and records must be retained for 10 years. A local accountant is recommended.

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into Luxembourg—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

Expand Internationally with Deel

Deel’s all-in-one platform gives you everything you need to expand into China — quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Open your own Shenzhen entity with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Global Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

FAQs

How long does it take to open an entity in China?

It typically takes about 6–8 weeks to fully set up a foreign-owned entity in China. This includes the time to get your business license (often a couple of weeks if all documents are ready) and additional weeks to open bank accounts and complete post-registration tasks.

What is the minimum capital required?

For most businesses, there is no statutory minimum capital requirement.

Can foreign companies own 100% of an entity in China?

Yes. In Shenzhen and across most of China, foreign companies can own 100% of a local entity in the majority of sectors via a WFOE structure.

Do I need a local director or representative?

No. China does not require a local Chinese national to be a director or the legal representative of your company. However if none of your directors/officers speak Chinese or are based in China, having local support for paperwork and government communications is very important.

How much does it cost to register an entity?

Often under CNY 3,000 (≈ USD 400), but expect additional costs for professional services, translations, and notarizations

Can I hire employees before the entity is fully registered?

Typically, no – you cannot directly hire employees in China until your entity exists (with a business license), because you need a legal entity to enter into contracts.

Can Deel help me open an entity in China?

Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance — in over 100 countries (including China). Deel’s local experts in China can handle:

• Documentation preparation
• Government filings
• Coordination with local authorities
• Name approval with Shenzhen authorities
• Obtaining company chops
• Tax registrations
• Coordination for opening bank accounts

This white-glove service lets you set up a WFOE in China without multiple trips or dealing with language barriers. While you focus on planning your business, Deel ensures the incorporation is done correctly and efficiently, and advises on the best structure and local norms.

Does Deel offer ongoing compliance and payroll support?

Yes. Deel offers both managed services and self-service tools to help you stay compliant after your entity is established.

Deel can help you:

• Handle payroll calculations and statutory benefits
• Manage monthly tax filings and year-end compliance
• Ensure payslips, social contributions, and tax withholdings are correct

For teams managing their own entities, the Deel Compliance Hub provides:

• Real-time regulatory updates and risk alerts across 150+ countries
• Notifications of labor law changes or upcoming filing deadlines
• Compliance Monitor to track obligations by entity
• Workforce Insights for analytics (e.g., headcount costs, turnover)
• An AI-powered Worker Classifier to reduce misclassification risk for contractors vs. employees

By leveraging Deel’s platform, you can proactively manage compliance (from tax to HR) and stay ahead of changing employment laws in China and beyond.