A couple emails between one of my firm’s clients and one of my firm’s China lawyers just landed in my in box.  The email from the client asked the following:

Do I need to have a business license to sell our products in China?  Someone recently told me that we do, but I was under the impression that we do not.  Could you clarify for me?
Our China lawyer answered as follows:
With respect to your question about the business license, it depends on what you mean by “sell in China.” A Chinese business license is for companies that are resident in China. If you open up a retail store in China and sell goods, you will need a business license. If you are simply shipping product to a third party in China, you do not need a business license.
I deem these emails to be “blog-worthy” both because we are often asked this question and because there are a number of people out there claiming that one must have a business license to sell product or services into China. As you might expect, a number of those who say that a license is necessary follow that up by telling you what they will charge to get you one, which basically requires that you form an entity in China (like a WFOE) to be able to get the license.

I have seen too many American and European companies form a company to do something in China that they could have done from America or from Europe without the need for a China entity at all. There will oftentimes be marketing benefits from having a WFOE in China, but a WFOE is not always necessary.

Just thought that you should know.

  • bystander

    Dan, what about import prohibitions? For example, I must suppose that there are significant restrictions on what kinds of software can be sold into China, apart from corresponding *export* restrictions from the US side. Does one need to acquire some kind of license from China to get proper clearance for, say, selling software from a US corporation to a Chinese buyer?

  • Francis du Bois

    I guess if you have people on the ground than the WFOE setup would be mandatory, no?

    • Paul Haas

      Well there could be a few ways to do that without a WFOE. Can have people temporarily on the ground, could go through an established agent, could set up a rep office, or could second employees. Would have to watch out for PE issues though.