Continuing our exploration of multilingual and multiregional website development, let’s discuss publishing web products in China.
With its own internet, never-ending innovation, and an online audience of 772 million, China is an attractive destination for e-commerce companies. However, publishing a website in China requires a lot of paperwork and preparation. If you’re willing to walk down the bureaucratic path, you can enter a completely different ecosystem and build a completely new niche for your company.
The Chinese internet is regulated by the government. This phenomenon is called the Great Firewall of China. It includes a number of laws and technologies that block access to many foreign websites and slow down internet traffic from across the border.
The Great Firewall can be seen as a way of controlling information and censoring content. However, this internet censorship has had a very positive impact on China’s internet economy, nourishing domestic companies and internet-based businesses.
In order to publish a web product in China, you need to have an officially registered business. There are two business types appropriate for this: a Joint Venture (JV) and a Wholly Foreign-Owned Enterprise (WFOE).
Wholly Foreign-Owned Enterprises (WFOEs) in China are legal entities completely owned by foreigners. Before 2015, foreigners weren’t allowed to open WFOEs to participate in e-commerce, so the only way to enter the Chinese internet market was to open a joint venture. Since that’s changed, however, you can now open and fully own an e-commerce business in China.
Joint Ventures are companies controlled by foreigners in collaboration with Chinese partners. Although a joint venture is simpler to open, it entitles a number of risks, especially with e-commerce. Unless you’re fully confident in your partner’s integrity and know that they’re going to protect your intellectual property (since intellectual property laws are almost non-existent in China), it would be much safer to open a WFOE.
There are several steps you need to take in order to officially register a business entity in China.
In this segment, we cover the process of opening a WFOE, since this is what we consider the best option for e-commerce. The process for opening a joint venture is similar. Keep in mind that some papers and processes can be different depending on your specific case. Use this article as general guidance, but always consult with authorities for the exact instructions.
The Chinese market and culture are different from what you might be used to in the West. Unless you’ve been living in China for the last couple of decades, speak fluent Mandarin, and are absolutely confident in your ability to sail the Chinese bureaucracy, it might be best to find a partner.
Opt for a legal consultant and make sure they’re well-versed and experienced in opening e-commerce businesses.
In order to open a company in China, you need to prepare and submit a number of documents. You’ll have to fill out most of them in Mandarin, so consider hiring a translator (or asking your legal consultant to handle it).
- Receive approval for your company’s name from the Administration of Industry and Commerce (AIC) in the city where you’re planning to start a business. This process should take from two to fifteen days depending on the location;
- Collect a list of your company’s management team: board directors, general managers, supervisors, legal representatives, etc. This list has to be accompanied with color copies of each person’s passport;
- Present your company’s legal address and a rental contract (or a contract of acquisition). A rental contract should be accompanied by the property owner’s name, email address, and phone number. Keep in mind that it would be illegal to share an address with another company, so this address has to be exclusive to your business;
- Present Articles of Association (AOA), a document describing your company’s scope of business, management, how you’re planning to profit from it, and so on;
- Provide a list of personnel you plan to hire, accompanied with their citizenship certificates, salaries, and benefits. If you haven’t yet recruited people for all positions, specify the uncovered positions with their planned salaries and benefits;
- Present your registered capital and total investment. The latter combines the registered capital and the loans you might be receiving from the company’s investors or a bank;
- Draw up a business plan and an investment budget. At this point, you need to convince the Chinese authorities that the business you want to open is actually going to succeed. Here, a correlation between your company’s business scope and your investment plan is crucial — you want to make sure that you have enough investments to open and sustain your business.
The Chinese authorities reserve the right to request any other document. Try to prepare in advance as much as you can. Even if you won’t end up using some papers in the end, it’s still better to have them.
If your paperwork isn’t in order, your application will definitely be denied. And once you have a denied application record, applying the second time becomes much harder.
There are two government entities you will deal with at this stage: the Ministry of Commerce (MOFCOM) and the State Administration of Industry and Commerce (SAIC).
Go to their offices in the city where you plan to start a company, ask for the documents you need to file (as they can be different from what we’ve listed above), prepare the documents, and file them. If everything goes right, you should be able to receive an approval certificate within 90 business days from the date of application. However, the authorities reserve the right to extend your waiting period for further verification.
After you receive an approval certificate from MOFCOM and SAIC, you have 30 business days to register with the AIC and apply for a business license. To receive it, you’ll need to collect something close to the following list of documents:
- an application form;
- your articles of association;
- the approval certificate;
- a document from the AIC approving your company's name;
- copies of business licenses from all company investors;
- a letter of recommendation from all banks where the company has accounts;
- the full list of your company’s management team;
- any other form or document requested by the AIC, depending on your location.
From the moment you receive a business license, your company officially exists in China.
With a business license, you now need to open an account at one of China’s banks approved by the State Administration of Foreign Exchange, and deposit your registered capital there.
Apart from completing these steps, you should also:
- receive approval from the Public Security Bureau;
- register with the Tax Bureau;
- register with the Customs Office;
- register with the State Administration of Foreign Exchange;
- hire a professional accountant (important because accounting books are a vital element of China’s bureaucracy).
Once you successfully complete all of these processes, you’ll also need to receive an Internet Content Provider license, which will allow you to host a website in Mainland China.
An ICP license, short for Internet Content Provider license, is issued by the Ministry of Industry and Information Technology in China and is required for all web products hosted on servers in Mainland China.
An ICP license is given to your web product as a simple number. You can see an example from DJI, a Chinese company selling technology related to drones and aerial photography.
There are two different levels of ICP, and you’ll have to get both to open an e-commerce website.
An ICP filing is the basic license that any company must apply for to have their website up and running. But this license doesn’t allow companies to engage in direct e-commerce activities — websites that have it can only be informational.
The ICP license for commercial websites allows businesses to publish websites partaking in commercial activities online. It can be acquired by websites that already have an ICP filing.
We want to give you this information in case you aren’t looking to build a commercial website or in case you just want to try the market out before proceeding with full-blown involvement. In any case, the short answer is no, you don’t. There are ways around the ICP license.
For instance, there are some companies whose websites operate through a locally-owned Chinese company. This is a solution for larger businesses really, but you could, in theory, ask to borrow another company’s ICP license to use it for your purposes and even do e-commerce through them. This would be different from establishing a Joint Venture in that this approach would be illegal, but the risks are still the same — you want to be sure of the proxy company’s integrity.
Another way is to host abroad. In fact, there are a number of websites hosted in Hong Kong. The geographic proximity mitigates the slowness of foreign traffic to China, though not by very much.
There’s really no way to predict what will happen to your website if you choose any of these methods. The sad truth is there’s no way to tell what’s going to happen to your website in any case. There are websites that work without an ICP license for years and don’t face any major consequences. There are also websites that have all the paperwork in perfect order and then still get taken down for no objectively good reason.
With that said, having an ICP license improves your chances of establishing a proper commercial presence in Mainland China and not having your website taken down straight after it’s stumbled upon by some authority.
With an ICP, you’ll also have a much better chance of appealing a blocked website.
First and foremost, you’ll likely need a Chinese legal partner to help you get through the forms, as all of them are only available in Mandarin, and also to help you understand the delicacies of Chinese bureaucracy and business ethics.
A business applying for an ICP license has to prove that it’s allowed to legally operate in Mainland China and also that their paperwork is compliant with local regulations, which are different from province to province.
As for the basic document list, you’ll need to have:
- a copy of your business license;
- proof that your business has a physical location in China;
- a domain name registered with a Chinese domain name provider;
- proof that you are the owner of that domain name;
- for individuals, a copy of your ID card (both front and back); for companies, a copy of the company’s registration certificate and copies of the IDs of all individuals in charge of acquiring the ICP license.
Here’s how the basic procedure of receiving an ICP license works:
The good thing is that you won’t have to interact with the authorities directly. That responsibility largely belongs to the company that hosts your website.
There are several options for website hosting in China, but there’s only one option if you want to make your life easier: Alibaba Cloud. It’s part of the Alibaba Group, an e-commerce giant in China, and offers by far the most comprehensive support in getting an ICP license. If you go to their website, you’ll find a comprehensive guide to receiving an ICP license and a list of all regulations by province.
This guide should give you a place to start with gathering papers and approvals for publishing a website in the Chinese market. Contact one of our sales representatives to start developing your e-commerce solution now.