China Law

Registering a business in China demands a registered address, a business scope that meets China's industrial policies, a Chinese business name and a feasibility study. You also need to register sufficient capital to cover expenses and provide identity documents for all foreign investors. Other requirements may depend on your business's industry and location.

China subscribes to territoriality principles, meaning intellectual protection is only valid in the country or territory of registration. It is a member state of the World Intellectual Property Organization (WIPO) and part of various international treaties to protect IP rights globally.

Key labor laws in China include mandatory written contracts, mandatory social insurance, overtime for working hours beyond the 40-hour workweek and anti-discrimination laws. These laws are complex and designed to ensure employee safety.

China has a comprehensive range of compliance requirements, including labor compliance, taxation compliance and even social responsibility compliance. Please contact us to help you navigate the complexities of Chinese business compliance.

In China, most foreign-owned companies are subject to a standard 25% tax requirement unless their country of origin has a tax treaty with China. Taxation is based on net profits and may also differ by sector or industry. Other taxes, incentives or treaties may apply.

China has three legal umbrellas covering these aspects — the Personal Information Protection Law (PIPL), Data Security Law (DSL) and Cybersecurity Law (CSL). Implementation of these laws in an evolving landscape is more complex.

Due to the complexities of its legal structures, China has limited ability to practice judicial review. Legislative and executive reviews are more common.

Chinese criminal law applies to all citizens and foreign visitors equally. If you break the law in China, they may arrest and detain you for an allowable period before prosecuting you. You'll be subject to the same penalties and punishments as a Chinese citizen if found guilty.

Most companies that come to us with a China question buy from China, and for them the legal work follows a set order. Confirm the Chinese company is who it claims to be, protect your intellectual property before you disclose it, register your trademark in China, and sign a manufacturing agreement that can be enforced there. The costly mistakes nearly always happen at the start, when a company wires a deposit or sends design files before any of this is in place. Companies selling into China, licensing technology to Chinese companies, or setting up operations in China face different issues, including entity formation, regulatory approvals, and employment and tax compliance.

You need a China NNN Agreement. A U.S.-style NDA protects confidentiality, but a Chinese manufacturer rarely needs to leak your information to hurt you. It can use your design to make and sell the product itself, or go around you to sell to your customers. An NNN Agreement covers all three risks: non-disclosure, non-use, and non-circumvention. To be worth anything, it must hold up where the factory and its assets are, which means it must be written in Chinese with the Chinese version controlling, governed by Chinese law, enforceable in a Chinese court, signed and sealed with the official company chop, with the factory identified by its registered Chinese name, and backed by a liquidated damages provision that sets the price of a breach in advance. Sign it before you share anything sensitive. If your design will emerge from work with the factory rather than arrive finished, an NNN is the wrong tool by itself, and you also need a product development agreement that settles who owns what gets created.

Yes. China is a first-to-file country, so the first party to file for your brand there usually gets it, and taking it back is slow, expensive, and uncertain. A factory, distributor, or squatter that registers your name can record it with Chinese customs and have your own products stopped at export, and buying the mark back costs far more than filing would have. Registration takes roughly six to eight months, so file before production starts. File in the right subclasses, not just the right classes, because China's subclasses are narrower than most companies expect and a filing in the correct Nice class can still leave some of your products exposed. Unless you plan to sell in China, you can probably skip registering the Chinese-character version of your brand.

Before you send money or sign anything, confirm the company exists and get its registered Chinese name. The English name a Chinese company puts on its website, business cards, and invoices has no legal standing, and relying on it can leave you unable to prove which company you contracted with. Confirm who owns the company, who its legal representative is, and whether its registered business scope covers what you are buying. Find out whether you are dealing with the factory itself or with a trading company, often in Hong Kong, that stands between you and the factory. For larger deals, check litigation, enforcement, and sanctions records; our Company Reputational Report draws on Chinese public records and on records open only to lawyers licensed in China. When you do pay, pay only into an account in the registered company's name, and treat any request to pay a different account as fraud until proven otherwise.

A good one does far more than tell the factory to make your product. It names the factory by its registered Chinese name, sets specifications and quality standards specific enough to inspect against, and resolves the issues behind most of the disputes we see: who owns the molds and tooling, whether the factory may subcontract your work, what happens when products fail inspection, and what the factory pays when it ships late or ships defective goods. It needs liquidated damages, because proving actual damages in a Chinese court is hard, and it needs the same foundation as an NNN Agreement, with the Chinese version controlling, the company chop, and a dispute mechanism designed around where the factory's assets are. Contracts the factory hands you are written to protect the factory. Contracts copied from U.S. templates, and a growing number drafted with AI, fail for a different reason, which is that nobody built them to be enforced in China. We draft the dispute resolution clause last, because the right forum and governing law depend on everything else in the deal.

Both, and in most cases with the Chinese version controlling. We have drafted thousands of China contracts, nearly all of them bilingual so both sides could read them. Not one said both languages control, because that invites a fight over which version means what, and a Chinese court will read the Chinese anyway. If you might ever need to enforce the contract in China, Chinese should usually govern, and you must know exactly what the Chinese says before you sign. With an English-only contract, the Chinese text the court relies on gets produced for the first time after the dispute starts, when the other side has every reason to fight over it.

Start with the contract. Whether it is in Chinese, which law governs, where disputes go, and whether it names the right Chinese company will determine most of your options. Then look at the money. Below roughly $250,000, litigation or arbitration in China rarely makes sense, because legal costs consume much of any realistic recovery. A U.S. court judgment against a Chinese company with no U.S. assets is usually worth little, because the company and its money are in China. The cases worth bringing almost always share the same features: a Chinese-language contract, sealed with the company chop, naming the company by its registered Chinese name, with a liquidated damages provision. Where those features are missing, negotiation, leverage over future orders, or pursuing the company's assets outside China may accomplish more than a lawsuit. When you do sue in China, ask the court at the outset to freeze the company's assets, because Chinese companies move money fast. A liquidated damages provision helps here too, because it gives the court a fixed sum to freeze against.

Sinosure is China's state-owned export credit insurer. When a foreign buyer does not pay a Chinese exporter, the exporter can file a claim, and Sinosure can pay it and then pursue the buyer through U.S. collection agencies and lawsuits, through proceedings in China, or by blacklisting the buyer so Chinese factories stop selling to it. Across the more than 100 Sinosure matters we have handled, the same rules hold. Suppliers threaten Sinosure far more often than claims materialize, but the period between a threat and a claim is the most useful window you will get, because almost none of the work that protects your business can be done after a claim lands. Do not contact Sinosure yourself, since reaching out signals that you believe the claim is good and that you have assets worth pursuing. Keep owners and key employees out of mainland China until the matter is resolved, because a Chinese company that believes it is owed money can have your people held there until it is paid, through an exit ban or by less formal means.