Doing Business in China in 2026 A Practical Starting Point for International Companies

China remains one of the most commercially significant markets in the world. In 2026, it continues to offer scale, depth of supply chains, advanced manufacturing capability, and access to a vast consumer base. At the same time, the operating environment has become more structured, more regulated, and more deliberate in how foreign participation is managed.

For international businesses, success in China now depends less on speed of entry and more on clarity, preparation, and alignment with regulatory and policy expectations from the outset.

This article provides a grounded introduction to what doing business in China looks like in 2026, and what overseas companies should understand before taking their first steps.

China in 2026 The Commercial Context

China’s economic priorities remain focused on quality growth rather than rapid expansion. Policy direction continues to favour advanced manufacturing, technology, green energy, healthcare, and domestic consumption, while tightening oversight in areas linked to data, tax compliance, and corporate governance.

Foreign investment is still welcomed, particularly where it supports industrial upgrading or regional development goals. That welcome is increasingly conditional on compliance, transparency, and long-term commitment.

For overseas businesses, this means China is open, but no longer forgiving of informal or lightly structured market entry.

Common Entry Structures for Foreign Companies

Choosing the correct entry structure is a strategic decision with long-term implications.

Wholly Foreign-Owned Enterprise WFOE

The WFOE remains the most common structure for foreign investors who want full operational control. It allows a foreign parent to conduct business activities directly in China, employ local staff, issue invoices, and repatriate profits subject to tax.

WFOEs are suitable for trading, manufacturing, services, and technology operations, provided the proposed activities fall within permitted sectors.

Joint Venture

Joint ventures are now less common than they once were, but still relevant in restricted industries or where a local partner brings assets, licences, or market access that cannot be replicated independently.

Joint ventures require careful structuring. Control, profit distribution, exit rights, and dispute resolution must be clearly defined from the start.

Representative Office

A representative office allows a foreign company to maintain a presence for liaison, research, or coordination purposes. It cannot generate revenue or sign contracts.

This structure can be useful as an initial observation platform, but it offers limited commercial utility in 2026.

Company Registration and Licensing Considerations

Company establishment in China is not a single step. It is a sequence of approvals and registrations that must align precisely.

Key considerations include:

• Defining the business scope with sufficient flexibility while remaining compliant

• Selecting the appropriate registered capital level based on operational needs and regulatory expectations

• Choosing a suitable registered address that meets local authority requirements

• Obtaining sector-specific licences where applicable

In 2026, authorities continue to scrutinise whether a company’s actual activities match its approved scope. Deviations can trigger penalties, forced rectification, or suspension of operations.

Tax and Ongoing Compliance Environment

China’s tax system is sophisticated and digitally integrated with banking, customs, and corporate registries.

Foreign-invested enterprises should expect obligations across several areas:

• Corporate income tax, generally at 25 percent unless incentives apply

• Value-added tax based on industry classification

• Withholding taxes on cross-border payments

• Monthly, quarterly, and annual filing obligations

Tax authorities increasingly focus on substance. Transfer pricing, intercompany service fees, and royalty arrangements are closely examined. Documentation and commercial rationale are essential.

Beyond tax, companies must also comply with annual reporting, statistical filings, foreign exchange reporting, and audit requirements.

Employment and Workforce Considerations

China’s labour framework prioritises employee protection and contractual clarity.

Foreign companies must be prepared to:

• Use compliant employment contracts from day one

• Contribute to mandatory social insurance and housing funds

• Follow local termination and redundancy rules carefully

Employment disputes are common where processes are informal or documentation is incomplete. A structured HR approach is not optional.

Data, Technology, and Regulatory Sensitivity

In 2026, data compliance is a central concern for many international businesses operating in China.

Companies handling personal information, operational data, or cross-border data transfers must assess their obligations under China’s data security and personal information protection regimes.

Technology companies, platform operators, and businesses integrating overseas systems with China operations should address data architecture and compliance planning early, rather than retrospectively.

What Successful Market Entry Looks Like in 2026

The most effective China market entries share common characteristics:

• Clear commercial objectives rather than speculative presence

• Proper structuring aligned with actual operations

• Early investment in compliance, tax planning, and governance

• Realistic timelines that account for approvals and local processes

China rewards preparation. It penalises assumptions.

Final Thoughts

Doing business in China in 2026 remains both viable and attractive for international companies that approach the market with discipline and respect for the regulatory framework.

The opportunity lies not in shortcuts, but in building a compliant, well-structured operation that can grow with confidence over time.

For businesses considering entry, expansion, or restructuring in China, early professional advice and careful planning remain the strongest foundations for long-term success.

Woodburn works with international businesses at every stage of their China journey, from initial market entry planning through to ongoing operational support. Our team advises on entity structuring, company registration, tax and compliance, cross-border considerations, and long-term governance, ensuring your China operations are built on a sound and defensible foundation. With on the ground expertise and a clear understanding of how policy and practice operate in real terms, Woodburn helps businesses move into China with confidence, clarity, and control.

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Woodburn Accountants & Advisors is one of China and Hong Kong’s most trusted business setup advisory firms.

Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.

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