Laws & Regulations Guide

This section provides general educational information only and does not constitute legal advice. Chinese law changes frequently; before taking any concrete step, please consult a qualified lawyer.

1. The Chinese legal system in one page

China is a civil-law system: written statutes drafted at national level, implemented through State Council regulations, and enforced by ministries and provincial or municipal bodies. The People's Courts hear disputes; specialised courts exist for IP, maritime and financial matters. Foreign companies and individuals are treated under Chinese law for anything they do in China — the Foreign Investment Law of 2020 replaced the earlier joint-venture-era regime with a general national-treatment framework, subject to a Negative List of restricted industries. National statutes trump local rules; when they conflict, national wins.

2. Setting up a company in China

Foreign investors typically set up as a Wholly Foreign-Owned Enterprise (WFOE), a Joint Venture, or a Representative Office (RO — non-trading, used for market presence). Each entity needs a Chinese-registered address, a business licence issued by the local Administration for Market Regulation (SAMR), tax registration, a bank account and — critically — company chops (see the next section). Timelines vary but expect two to three months for a WFOE, longer for restricted industries. Registered capital is now declared, not paid up front, but chosen too small can hurt credibility.

3. Contracts, chops and dispute resolution

A written contract in China works because it is bilingual, has the correct chops on every page, and gets registered where required. The company chop (公章) legally binds the entity — a signature alone does not. Ask about who holds each chop and use dual-language contracts with a governing-law clause pointing to PRC law and arbitration in CIETAC (China International Economic and Trade Arbitration Commission), HKIAC or a similar seat both sides accept. NNN (non-use, non-disclosure, non-circumvention) agreements protect designs during quoting; NDAs from Western templates often are not enforceable — get one drafted for China.

4. Import & export regulations

Import-export requires a filing with Customs and a Foreign Trade Operator record with MOFCOM. Goods classify under HS codes; declaration is done through Chinese Customs' Single Window. Inspection and quarantine (SPS) applies to food, agricultural products and certain industrial goods; CCC certification applies to a defined list. Some categories are restricted (dual-use goods, precursors, tungsten) or prohibited (endangered species, certain waste). Duties depend on origin and any RCEP, ASEAN or bilateral FTA — check the tariff before quoting.

5. Intellectual property in China

China is first-to-file for trademarks and patents. Register your brand in Chinese characters as well as English — a common mistake is to skip the Chinese, then discover a squatter has parked it. Register key trademarks in Class 35 (retail) as well as your product class. Copyright is automatic but voluntary registration helps enforcement. Design patents and utility models are cheap and fast; invention patents are slower but stronger. Confidentiality clauses go into NNN agreements, and take-down actions on platforms (Alibaba, Taobao) work when you own the registered rights.

6. Foreign investment rules

Foreign investment is governed by the Foreign Investment Law (2020), a national-treatment framework with a Negative List that names restricted or prohibited industries (revised periodically). Sectors outside the list open on the same footing as domestic investors; sectors on the list require an approval process. Sensitive areas (data services, publishing, education, some tech) carry additional review. Free Trade Zones offer wider access. Verify current list before committing capital.

7. Manufacturing & supplier compliance

Chinese factories must hold a business licence covering their product scope, meet CCC certification where required, and follow environmental permits enforced by local ecological bureaus. For food, cosmetics, medical devices and toys, additional production licences (SAMR-issued) apply. Foreign brands importing OEM goods should insist on: verified factory audit, product test reports, valid CCC or other required marks, and a compliant supply-chain declaration for materials of concern.

8. Employment & labour

Labor law is employee-friendly. Written contracts are compulsory from day one; probation caps apply, minimum-wage rates vary by city, social insurance (pension, medical, unemployment, work injury, maternity) and housing fund are mandatory. Overtime is regulated and paid at premium rates. Termination requires cause and notice; unilateral firing without procedure can trigger back-pay and reinstatement claims. Hiring foreign staff requires a Z-visa work permit and residence permit — plan 6–8 weeks lead time.

9. Tax, fapiao & foreign exchange

Corporate income tax is 25% (with reductions for high-tech and small-and-thin-profit firms). VAT applies to most goods (13% standard, 9% or 6% for many services). Individual income tax on employment income runs progressive 3–45%. Fapiao (税务发票) is the government-issued tax receipt — Chinese suppliers must issue one for a valid expense; foreign buyers importing goods will get commercial invoices, not fapiao, but should retain full customs paperwork. Foreign-exchange rules require SAFE-registered banks for cross-border transfers; document reason and amount.

10. Customs & trade compliance for importers

For importers into China: complete a customs declaration through the Single Window, present invoice, packing list, B/L, contract, MTC (for metals), and applicable certificates (CCC, health, safety). Duties are paid according to HS code and applicable trade agreements. Common mistakes: wrong HS code, undervaluation, mislabelled origin, missing certifications. Penalties can include fines, cargo detention, blacklisting and criminal liability in serious cases. Use a licensed Chinese customs broker.

11. Everyday rules for foreigners

Foreigners must carry an ID (passport) and register their local address with the police station within 24 hours of arrival — hotels do this automatically. Follow visa terms strictly. Internet access follows Chinese rules (some Western services are unavailable without special connectivity — check the law of your destination country before using workarounds). Traffic laws are strict (drunk-driving is criminal). Photography is generally fine except at military, border and some government sites. Drug offences are severely punished.

12. What business travellers should know

Use a business visa (M-visa) for meetings and negotiations; a work permit is required for actual employment. Do not sign binding contracts as an unregistered representative — a WFOE or authorised local partner should sign. Carry business cards printed in Chinese on the reverse; use a translator or interpreter for anything important, and never assume verbal English promises will be enforceable. Factory visits should be scheduled through the host, and NDA/NNN agreements should already be in place before entering.

13. Dispute resolution & legal help

Most Chinese contracts favour negotiation and mediation first; then arbitration; litigation last. Arbitration in CIETAC (mainland) or HKIAC (Hong Kong) is respected and enforceable under the New York Convention in 170+ countries. Chinese courts have improved but foreign judgment enforcement is patchy — write PRC or HK seat arbitration into the contract from day one. Local counsel is essential the moment things get formal; for large disputes involve a firm with both Chinese and international experience.

14. Hong Kong: how it differs

Hong Kong is a common-law jurisdiction with English contract tradition, its own currency (HKD), a low-tax profits regime (16.5% corporate, none on dividends, no VAT/GST) and no capital controls. Company setup is quick (a limited company can be registered in about a week). Contracts in English are standard; disputes commonly go to HK courts or HKIAC arbitration. The judiciary is independent, judgments are respected internationally. Import-export requires far less regulatory friction than mainland customs. Use Hong Kong for holding, invoicing and international payments; use the mainland for production and mainland-facing sales.

Legal checklist for foreign businesses

• Verify supplier: business licence + qichacha search + factory audit
• Register your trademark in Chinese characters, English, and Class 35
• Sign a bilingual contract, PRC or HK governing law, arbitration seat named
• Insist on the correct company chops on every contract page
• Require MTC / CCC / MSDS / CO where applicable — before shipment, not at customs
• Use a Chinese customs broker; confirm HS code at origin and destination
• Structure payment to keep leverage (never 100% advance to unknown suppliers)
• For staff: written contracts, social insurance, housing fund from day one
• Cross-border transfers only through SAFE-registered banks with documented purpose
• Keep the full paper trail — you may need it for tax, IP or dispute later

How LinkWin uses this We are traders, not lawyers — but every deal we run is shaped by these rules. We flag issues early, brief you on where local counsel is essential, and can introduce trusted PRC and Hong Kong lawyers, accountants and audit firms when a deal needs them.