Yes. A foreigner can legally start a business in China. The usual route is a wholly foreign-owned enterprise (WFOE) – a company you own 100% – and you can register it yourself as long as the business is not in a sector on China’s Negative List for Foreign Investment Access.
What the law says
China’s Foreign Investment Law, in force since 1 January 2020, applies “pre-establishment national treatment plus a negative list” (Article 4). In plain terms: for any industry that is not on the Negative List, a foreign investor sets up and registers a company on the same terms as a Chinese investor. For industries that are on the list, the sector is either closed to foreign investment or allowed only under conditions, such as a Chinese partner or a higher registered capital requirement.
The company itself is registered with the local Administration for Market Regulation, which issues the business licence. The two common structures are the WFOE (100% foreign-owned) and the equity joint venture (JV) with a Chinese partner. The Negative List is revised from time to time; the 2024 edition removed the remaining restrictions on manufacturing, so most manufacturing projects are now open.
Do you also need a work permit?
Owning shares is not the same as being allowed to work. Under the Exit and Entry Administration Law (Article 41), a foreigner who works in China must hold a work permit and a work-type residence permit. So if you plan to run the company yourself, you normally apply for the work permit through your own company after it is registered. Working without one is treated as illegal employment: Article 80 of the same law provides a fine of RMB 5,000 to 20,000, and in serious cases detention of 5 to 15 days together with a fine.
In practice, two things catch foreigners out. First, you generally cannot register as an individual business (getihu) – the practical route is a company. Second, rules vary by city and the restricted sectors can change, so confirm the current Negative List and the local registration requirements before you commit money.
Quick scenario (illustrative): a German engineer wants to open a software consultancy in Shanghai. Software is not on the Negative List, so she can register a WFOE that she owns 100% – but to work in it legally she must also obtain a work permit and a work-type residence permit.
The bottom line: yes, a foreigner can own a company in China – but only a work permit lets you lawfully work in it.
Wang Guan | Co-founder, Beijing Haolue Law Firm | +86 17813108512