What is a China Company?

Hi 🙂 Today’s post is about what is a China Company. 

If you are serious about sourcing from China, you will have seen that 99% of potential suppliers are a China Company. That means you are not dealing with a single person. Instead you are dealing with a group of people. And, these guys are “hiding” behind a company name. 

In this post, we are going to share some tips and tricks for understanding your potential supplier’s  China Company

Are you ready? Let’s do it!

Who We Are?

China Verification is a service for finding and verifying China suppliers. We have verified hundreds of China companies  

China Corporation is one useful source of information about China suppliers. 

Depending on how deep you want to go with your verification process, you may find yourself looking at and trying to understand a China Corporation. 

At China Verification we are both serious and passionate about helping our clients. That is why we prepared this post to help hardworking entrepreneurs - just like you?

We are going to show you: 

- Types of China Corporations

- What is a China Limited Liability Company

- What is a China Company Limited by Shares

- Who regulates a China Company

What are the types of China Corporations?

Under China’s 2013 Company Law, there are two primary types of corporations. These are the Limited Liability Company and the Company Limited by Shares (the “Big 2”).

The vast majority of corporate entities in China are one or another of the Big 2

Under China’s 2013 Company Law, there are two primary types of corporations. These are the Limited Liability Company and the Company Limited by Shares (the “Big 2”).

The vast majority of corporate entities in China are one or another of the Big 2

We are going to focus on the Big 2 here

What is a China Limited Liability Company

In China, the limited liability company (LLC; in Chinese, 有限责任公司 or 有限公司) structure is generally for smaller businesses. 

Chinese LLCs may not have more than 50 shareholders. Ownership share is determined by the amount of subscribed capital of each shareholder; in other words, the degree to which each shareholder has a say in company decisions and a right to the company’s profits is dependent on the capital he or she subscribed to at the time the company incorporated.

Chinese LLCs are only required to have a single director and a single supervisor, although shareholders can choose to appoint more than that. A transfer of a company shares between shareholders can be done without any restrictions. However, a transfer of company shares from one shareholder to an individual or entity that is not currently a shareholder requires approval by shareholders accounting for at least 50 percent of the company’s registered capital.

What is a China Company Limited by Shares

Unlike LLCs, A China company limited by shares (股份有限公司 or 股份公司) structure is generally used by larger companies, including publicly traded companies. (In China,  a publicly traded must be a company limited by shares). 

Compared to an LLC, the most important point about a China Company Limited by Shares is that shareholders’ ownership is determined by the number of shares of the company that they hold. Each share has an equal value.

A Company limited by shares must have a board of directors and a board of supervisors. Moreover, the shareholders must hold meetings on a regular basis. If a company limited by shares is publicly traded, it must also appoint independent directors. Shares of companies limited by shares can be transferred without any restrictions.

Who Regulates a China Company 

Companies in China are regulated by a patchwork of laws and regulations 

Regardless of their type, any China Company must disclose their owners, officers, and basic details such as address and date of incorporation through the State Administration of Market Regulation’s National Enterprise Credit Information Publicity System. (Formerly known as China SAIC Corporate Registry.)

How Can I See a China Company’s Public Record?

Great question! We are working on a post to answer that question. Check back here or sign-up for our china business insider email list to get updates about our newest posts.

Do I need to See My Supplier’s Public Record?

Another great question! We are working on an answer for that question, too.  Please feel free to check back here or sign-up for our china business insider email list to get updates about our newest posts.

What’s Next?  

Guys 🙂 I really hope you found today’s post to be an assistance . 

Like you know, we are serious and passionate about assisting hardworking entrepreneurs. If you have any questions about finding the right supplier in China, we are here to help.

If you are interested in this topic you are more than likely going to be interested in our Expert Guide. Check it out here.