Chinese-English Business Glossary

Business License

The official document issued by the Administration for Market Regulation (AMR) that legally establishes a company in China. Includes the Unified Social Credit Code and approved business scope.

Unified Social Credit Code

An 18-character national identifier on the business license that serves as the company tax ID, registration number, and unified code across all government systems.

Foreign-Invested Enterprise (FIE)

Umbrella term for any China entity with foreign capital, including WFOEs, JVs, and FICEs. Governed by the 2020 Foreign Investment Law.

Wholly Foreign-Owned Enterprise (WFOE)

A limited liability company 100% owned by foreign investor(s). The most popular structure for foreign businesses wanting full control of China operations.

Joint Venture (JV)

A company with both foreign and Chinese shareholders. Required in some restricted sectors; equity JVs (EJV) and cooperative JVs (CJV) are the two main forms.

Representative Office (Rep Office / RO)

A liaison office that cannot generate revenue or sign contracts. Limited to market research, product promotion, and coordination. Easiest to set up but most limited in scope.

Legal Representative

The person (often a director or GM) legally authorized to act on behalf of the company. Their signature and chops bind the company; must be a real individual, can be foreign.

Business Scope

The specific activities a company is legally permitted to conduct, approved by AMR. Changing scope requires an amendment filing. Activities outside scope are invalid/illegal.

Articles of Association

The company constitution detailing shareholding, management structure, profit distribution, and operational rules. Filed with AMR during registration.

Registered Capital

The capital amount a company declares it will inject. Since 2014, China uses a subscribed (not paid-up) system - you declare an amount and a contribution deadline (typically 5-30 years).

Subscribed Capital System

The system allowing registered capital to be paid in over a declared period rather than upfront. Note: banks and SAFE may still require actual injection before operating.

Capital Verification Report

A report by a certified CPA confirming that registered capital has actually been injected. Sometimes required by banks or for certain licenses, even under the subscribed system.

Company Seal (Chop)

The official company stamp registered with the Public Security Bureau. Legally required; chops include the official seal, financial seal, legal rep seal, and contract seal.

Corporate Income Tax (CIT)

Tax on company profits, standard rate 25%. Reduced rates: 15% for HNTE/encouraged industries/FTZ-eligible, 20% for small low-profit enterprises. Filed quarterly, settled annually.

Individual Income Tax (IIT)

Tax on individual income, progressive 3-45%. Standard deduction ¥5,000/month. Resident taxpayers (183+ days) taxed on worldwide income; non-residents on China-source only.

Value-Added Tax (VAT)

Tax on value added at each production/distribution stage. Rates: 13% (goods), 9% (transport/utilities), 6% (services). General taxpayers vs small-scale taxpayers have different treatment.

Stamp Duty

A small tax on certain contracts, capital contributions, and accounting documents. E.g. 0.03% on purchase/sale contracts, 0.025% on recorded capital.

Customs Duty / Tariff

Tax on imported/exported goods. Rates vary by HS code and origin (MFN, FTA preferential, etc.). FTZs/FTP may offer zero-tariff on qualifying goods.

Withholding Tax (WHT)

Tax withheld on cross-border payments to non-residents: 10% on dividends/interest/royalties (standard treaty rate, lower with some treaties). Levied before the payment leaves China.

General Taxpayer

A VAT status for larger businesses allowing them to deduct input VAT and issue special VAT invoices. Threshold: annual sales >¥5M. Contrast with small-scale taxpayer.

Fapiao (Official Invoice)

Government-issued invoice required for any business transaction. The golden invoice (金税) system tracks VAT. Without a fapiao, expenses often cannot be deducted for tax or reimbursed.

Foreign Exchange (Forex)

Foreign currency. Heavily regulated by SAFE; cross-border flows require verification and documented commercial purpose.

Foreign Exchange Settlement

Converting foreign currency INTO RMB. Banks handle this with SAFE registration; capital account vs current account items have different rules.

Foreign Exchange Sales

Converting RMB INTO foreign currency for outward remittance. Requires documentation (e.g. service contracts, dividend resolutions) and bank verification.

Profit Repatriation

Remitting after-tax profits to the foreign parent. Requires completed annual audit, CIT paid, and a board dividend resolution. Subject to 10% WHT (treaty-reducible).

RMB Basic Account

The primary RMB bank account for daily operations: payroll, tax payments, cash management. One per company, opened at a Chinese bank after the business license.

Foreign Exchange Capital Account

A special account for receiving foreign registered capital injections. Capital is settled (converted to RMB) under SAFE rules before use in operations.

State Administration of Foreign Exchange (SAFE)

The regulator overseeing all foreign exchange flows, cross-border payments, and the forex reserves. Banks act as delegated verifiers for most SAFE filings.

Work Permit

Authorization for a foreigner to work in China, issued by the State Administration of Foreign Experts Affairs. Categories A (high talent), B (general professional), C (unskilled/temporary).

Residence Permit

A permit (separate from the work permit) placed in the passport allowing the holder to reside and exit/re-enter China for the permit duration. Applied for AFTER entering on a Z visa.

Z Visa (Work Visa)

The visa to ENTER China for work. Single-entry, usually valid 30 days ("000 days"). Within that window you must convert it to a Residence Permit. Cannot work on a Z visa alone.

Permanent Residency (Green Card)

China permanent residence. Difficult to obtain - pathways include 4+ years of work + tax compliance, high-level talent, or marriage. Opaque process and approval rates.

Five Insurances and One Fund

Mandatory social contributions: pension, medical, unemployment, work injury, maternity (employers), plus the housing provident fund. Total employer cost ~25-32% of salary.

Housing Provident Fund

A mandatory housing savings scheme, employer + employee each contribute 5-12% of salary (city-dependent). Funds can buy housing or be withdrawn under conditions.

Data Security Law (DSL)

Effective 2021. Governs data security classification, important data protection, and cross-border data transfer. Foreign companies handling China user data must comply.

Personal Information Protection Law (PIPL)

Effective 2021. China's GDPR equivalent for personal data. Requires consent, purpose limitation, and security assessments for cross-border PI transfer.

Cybersecurity Law (CSL)

Effective 2017. Imposes security obligations on network operators and critical information infrastructure operators, including data localization and security review.

Foreign Investment Law (FIL)

Effective 2020. Unified legal framework for foreign investment, replacing the three old FIE laws. Establishes pre-establishment national treatment + negative list, and a foreign investment information reporting system.

Record-Filing

A registration/notification with authorities (vs formal approval). Many activities shifted from 审批 (approval) to 备案 (filing) under reform - simpler but still mandatory.

Negative List

The list of sectors where foreign investment is restricted or prohibited. Everything NOT on the list is open to foreign investment with national treatment. Updated annually; manufacturing fully opened in 2024.

Encouraged Industries

Sectors in the Catalogue of Encouraged Industries eligible for incentives (15% CIT, land priority, lower capital requirements). Updated periodically to steer investment toward strategic sectors.

Free Trade Zone (FTZ)

Special economic zones testing liberalized policies (e.g. Shanghai, Shenzhen, Hainan). Offer streamlined registration, relaxed foreign access in pilot sectors, and customs facilitation.

Free Trade Port (FTP)

The most open form - Hainan FTP is the flagship. Zero-tariff, 15% CIT/IIT, separate negative list, full-island customs operations rolling out 2025-2035.