Ask Daona, Vol. 1: The Ten Questions We Hear Most

China Field Notes · by Daona · 11 min read

Ask Daona is the part of this column where we answer your questions. It is meant to run on reader letters: you reply ASK with a question, we pick the ones that are useful to many people, and we answer them here without your name.

This is the first volume, and we want to be straightforward about it. The column has only just started, so there is no stack of reader letters yet, and we are not going to invent any. Instead, Vol. 1 collects the ten questions foreign clients ask us most often in meetings — the ones that come up over coffee in Shanghai, on calls with headquarters, and in the first ten minutes of almost every conversation about doing business in China.

Each answer is short. None is the full story. Each ends with the issue where we treat the subject in depth, so you can use this page as an index to the column so far. From Vol. 2 onwards, the questions will be yours.

No. Unilateral visa-free entry — currently open to ordinary passport holders from around 50 countries, for up to 30 days, under a notice that runs to 31 December 2026 — covers business, tourism, visiting family and transit. "Business" means meetings, negotiations, trade fairs, signing contracts and factory visits. It does not include employment.

Working follows a set route: the employer obtains a work permit notification (外国人工作许可通知), you apply for a Z visa abroad, the employer applies for the work permit (外国人工作许可证), and you apply for a residence permit (居留许可) within 30 days of entry. Roughly three months from offer to residence permit is a sensible plan.

Penalties fall on both sides. Under Article 80 of the Exit and Entry Administration Law, an individual working illegally can be fined ¥5,000–20,000, and the employer ¥10,000 per person, up to ¥100,000.

Mostly, yes. Alipay (支付宝) and WeChat Pay (微信支付) both accept the major international card networks, and for daily spending they work well. Three limits are worth knowing before you land.

· The fee. Payments of ¥200 or less carry no platform fee. Above ¥200, a 3% fee applies to the whole amount, on top of anything your own bank charges.

Illustrative.

· The limit. The regulator has said the caps for overseas visitors were raised to US$5,000 per transaction and US$50,000 a year. The limit shown in your app can be lower and depends on verification. Check before a large payment.

· What fails. With a foreign card you cannot send personal transfers or red packets (红包) — so no splitting a bill by transfer, and no paying an individual landlord.

Yes, and it is the step most visitors miss. Under Article 39 of the Exit and Entry Administration Law, a foreigner staying anywhere other than a hotel — a rented flat, a friend's home, a company apartment — must complete accommodation registration (住宿登记) within 24 hours of arriving at that address. The duty is on you or the person accommodating you. Hotels register you at check-in.

Since 20 March 2026, online registration has been available through the NIA 12367 app and mini programs, starting in seven provinces and regions and being extended nationwide; the first registration at an address needs the host's help. Otherwise, go to the local police station (派出所) with your passport and the lease or the host's documents.

Skipping it can bring a warning and a fine of up to ¥2,000. The larger cost comes later: the exit-entry bureau checks your registration history when you apply for a residence permit. Keep a photo of every form.

Start with one question: will you invoice customers in China within the next 12 months? If so, you need a company — a wholly foreign-owned enterprise (外商独资企业) or a joint venture. A representative office (代表处) cannot sign sales contracts in its own name, issue fapiao or receive revenue.

The representative office is often chosen as the "cheap test". It rarely is. It is usually taxed on a deemed-profit basis calculated from its expenses, is capped at four representatives, and generally hires Chinese staff through a licensed agency. When the first customer arrives, the company has to set up a WFOE anyway.

A WFOE can sell in renminbi, hire directly and sponsor work permits. Most take four to eight weeks to reach a business licence, and two to four more weeks to a working bank account.

Less than headquarters probably wants. There is no statutory minimum for an ordinary company, but since the revised Company Law (公司法) took effect on 1 July 2024, subscribed capital in a limited liability company must be paid in within five years, every contribution is publicly disclosed, and shareholders can be required to pay early if the company cannot pay its debts.

Choose it the way you would choose a loan amount: build a realistic two-year cash plan, check whether any licence in your scope needs a minimum, and set a figure you will actually fund. A large round number "for credibility" creates a legal obligation, not credibility.

Companies set up before July 2024 with longer schedules have a transition window that closes on 30 June 2027. Check your articles now.

Start with identity. Ask for a photo of the business licence (营业执照) and note the registered Chinese name — the company's only legal name — and the 18-character Unified Social Credit Code (统一社会信用代码). English names have no legal status.

Then spend half an hour with the public records. The National Enterprise Credit Information Publicity System (gsxt.gov.cn) shows shareholders, recent changes, abnormal-operations listings and the annual report, including the number of employees covered by social insurance — a useful check on a "factory with 300 workers". China Enforcement Information Disclosure (zxgk.court.gov.cn) shows whether the company or its legal representative is a judgement debtor.

Finally, the names on the contract, the business licence and the beneficiary bank account should be identical. A request to pay a different company or a personal account deserves a written explanation, and usually a refusal.

Because for a Chinese company, a cost without a fapiao (发票) is often a cost it cannot deduct. A fapiao is an official invoice issued through the tax authorities' system — fully digital nationwide since December 2024 — and it is the standard evidence that a domestic purchase is deductible.

Two kinds matter. A special VAT fapiao (增值税专用发票) lets a general VAT taxpayer credit the input VAT. A general fapiao (普通发票) supports cost deduction but not the VAT credit.

Two red lines. Never buy fapiao: issuing or using fapiao that do not reflect a real transaction is a criminal offence. And never accept one from a different company than the one you contracted with and paid.

Not straight away. Spending 183 full days in mainland China in a calendar year makes you a tax resident (居民个人). Only days with a full 24 hours in China count, so arrival and departure days usually do not.

Under the six-year rule, foreign-source income paid by an overseas payer can stay exempt unless you have had six consecutive years of 183 days or more with no single trip out longer than 30 days. One 31-day trip resets the count. Counting started in 2019.

Salary for work performed in China is always taxable, wherever it is paid. And tax residents choose either tax-exempt housing, language and children's education allowances, or the special additional deductions — not both in one year — until 31 December 2027.

A WFOE or joint venture can hire directly once it has opened social insurance and housing fund accounts. A representative office generally hires through a licensed agency, which is the legal employer.

· Contract: a written labour contract (书面劳动合同) within one month of the first day of work, or double wages for each month without one.

· Probation (试用期): capped by contract term — two months for one to three years, six months for three years or more — and once per employee.

· Social insurance: paid on the real salary.

As a rule of thumb, employer contributions add roughly one-third on top of gross salary, depending on the city. There is no at-will employment: termination needs statutory grounds, and severance is usually one month's pay per year of service.

Yes. For a company that has made a real profit, paid its taxes and kept clean books, a dividend to a foreign shareholder is a current-account payment handled by an ordinary bank, not a government office.

What matters is the order: annual audit; corporate income tax reconciliation; covering prior losses; the statutory reserve; a shareholder decision; the tax record filing for payments above US$50,000; then the bank. Skipping a step is what stops a payment at the counter.

Dividends paid to a foreign company carry a 10% withholding tax unless a tax treaty reduces it; foreign individual shareholders have been taxed at 20% since 1 September 2026. Before declaring, ask whether some money should stay in China: a reinvestment tax credit introduced in 2025 can reward profits reinvested in encouraged sectors and held for five years.

Several questions come up so often that they have their own issues in the next few weeks:

Trademarks — registering in China before someone else does — are covered in Issue 19.

"Visa-free means I can do anything for 30 days." It means you can enter for listed purposes. Employment is not one of them.

"The registration is the landlord's problem." The legal duty is on you or the person accommodating you.

"A representative office is the low-risk way to start." It is taxed on expenses and cannot invoice.

"Nobody actually pays registered capital in." No longer possible to defer beyond five years.

"Money paid into my home account isn't taxed in China." Salary for work done in China is China-source income, wherever it is paid.

"China doesn't let profits out." Ordinary dividends go through your bank. Delays come from missing steps, not quotas.

Rules as of October 2026. This column provides general information, not legal advice. Answers here are summaries; each linked issue gives the detail. Visa, permit and tax decisions are made by the competent authorities; licensed steps should be handled by your employer, a licensed agency, a law firm or a tax firm. Government fees and licensed firms' fees are settled by the client at cost.

China Field Notes · by Daona