Establishing and Running a Business in Shenzhen

Shenzhen is designed for execution. Fast moving supply chains, advanced infrastructure and deep professional services make it an attractive base for foreign invested companies. Once incorporation is complete, attention quickly shifts to the practical realities of operating day to day. Banking access, internal controls and governance discipline determine whether the business runs smoothly or becomes exposed to delay and regulatory risk.

This article focuses on the operational foundations required to establish and run a business in Shenzhen with confidence.

Opening and Managing Bank Accounts

Banking setup is often the most time sensitive operational step after incorporation. A Shenzhen entity will usually require both an RMB basic account and a foreign currency capital account.

Banks conduct detailed know your client reviews. Directors and the legal representative may need to attend in person, and overseas documentation often requires notarisation and legalisation. Processing times vary by bank and by shareholder profile.

Once accounts are active, companies must follow strict rules around usage. The basic account is used for daily operations such as payroll and supplier payments. The capital account is used for registered capital injections and approved cross border funding. Transfers between accounts must align with approved purposes and supporting documentation.

Ongoing banking management requires accurate bookkeeping, consistent transaction descriptions and alignment with tax filings. Inconsistencies can trigger reviews or account restrictions.

Internal Controls and Payment Authority

Chinese regulators place increasing emphasis on internal controls, particularly around payments and expense approval.

Clear authorisation matrices are essential. These define who can approve payments, sign contracts and access banking platforms. Many companies implement dual approval processes for payments above defined thresholds to reduce risk.

Company chops remain legally significant in China. Operational chops, financial chops and contract chops should be securely stored and controlled. Loss or misuse of a chop can have serious legal consequences.

Documented procedures are not a formality. They are often reviewed by banks, auditors and tax authorities when assessing whether a company is operating properly.

Accounting Systems and Record Keeping

Accounting in China must follow Chinese accounting standards and be supported by original source documents. Foreign systems can be used for group reporting, but statutory books must be maintained locally.

Invoices known as fapiao underpin the entire accounting and tax framework. Proper issuance, receipt and verification of fapiao is critical. Errors can lead to VAT disallowance or penalties.

Many Shenzhen businesses engage local accountants while maintaining oversight from overseas finance teams. Alignment between local records and group reporting avoids reconciliation issues later.

Governance and Decision Making

Governance expectations in China differ from those in many overseas jurisdictions. Roles and authority are defined by registration rather than job title alone.

The legal representative has significant power and responsibility. Board resolutions, shareholder decisions and articles of association should clearly define limits of authority and escalation processes.

Changes to directors, shareholding or registered details require formal filings. Informal arrangements that are not reflected in registrations have no legal standing.

Well structured governance provides protection for both the China entity and the overseas parent, particularly in dispute or exit scenarios.

Staffing and Operational Readiness

Hiring staff in Shenzhen requires readiness on several fronts. Labour contracts must comply with local law and be registered where required. Payroll systems must integrate with tax and social insurance platforms.

Before hiring, companies should confirm that social insurance and housing fund accounts are active. Delays in setup can create compliance exposure from the first payroll cycle.

Operational readiness also includes IT systems, data handling protocols and physical premises that align with the registered address and business scope.

Managing Compliance as the Business Grows

Once operational, Shenzhen companies face ongoing compliance requirements that increase with scale.

Monthly or quarterly tax filingsAnnual audit and statutory reportingAnnual business licence and compliance filings

Employment related reporting and inspections

Growth often introduces complexity around intercompany transactions, cross border payments and transfer pricing. These areas require proactive planning rather than reactive fixes.

Why Early Operational Design Matters

Many issues encountered by foreign invested companies in Shenzhen arise after incorporation, not during it. Banking delays, weak controls or unclear governance can restrict growth and distract management.

Designing operational processes early reduces friction and provides clarity for local teams, overseas stakeholders and regulators.

How Woodburn Supports Shenzhen Operations

Woodburn supports international businesses in establishing and running their Shenzhen operations with a focus on practical execution. This includes banking coordination, governance structuring, accounting oversight and ongoing operational compliance.

By aligning local requirements with international standards, businesses gain control, visibility and confidence as they build and scale in Shenzhen.

---

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.

Contact us