A company must have an authorized business scope to engage in certain commercial activities in China and along with setting a registered capital amount, it is one of the key decisions to make when setting up a company here.  By comparison, in many other countries, there are no such rules limiting companies.

A company incorporated in a US state, for example, usually can simply engage in any lawful business, provided no industry-specific licenses are required.  Companies can have more than one business type within their business scope. 

How to Check the Business Scope of Chinese Companies?

The scope of business is specified in the main operating license (known as the "business license") of Chinese companies, and is publicly available information.

The business license will include categories of authorized businesses such as "adverstising and event management," "software development," or "business consulting." An overseas logistics company operating in China therefore cannot engage in activities such as the sale of textile products or guided vacation tours.

It is not uncommon for B2B purchasers to request a copy of the business license from a Chinese company before confirming to do business with them.

How to Determine the Business Scope When Establising a Company in China

When you first apply to setup your company, it is generally not a bad idea to ask for as wide a business scope as you think your company may need in the future.  Yes, to be sure, asking for too broad of a scope may sometimes get rejected by the authorities.

Scope of Business and Company Law

All companies, whether domestic or foreign-owned (a "WFOE") in China, must establish an Articles of Association ("AOA") at the incorporation stage. The AOA must be approved by the provincial authorities where the company is established.

The AOA sets up the governing rules of the company. It is analogous to the "Articles of Incorporation" or "Certificate of Incorporation" in other countries. The company's AOA also lists out and regulates the business scope of the company. The company cannot apply for registration beyond the business scope stipulated in its Articles of Association.

Expand into China without setting up a company, by employing or relocating key staff to take a first step in exploring the market. A professional employer organization (PEO) service can act as the official employer of record (EOR) for your staff in China while you expand your business. With the support of our trusted partner network, we can facilitate local hiring and employment without the time and cost of setting up a legal entity in country.

Contact us for more information at inquires@ChinaLawSolutions.com