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Starting a Business in China: Entry RegulationWhen entrepreneurs draw up a business plan and try to get under way, the first hurdles they face are theprocedures required to incorporate and register the new firm before they can legally operate. Economiesdiffer greatly in how they regulate the entry of new businesses. In some the process is straightforwardand affordable. In others the procedures are so burdensome that entrepreneurs may have to bribeofficials to speed the process—or may decide to run their business informally.The data on starting a business are based on a survey and research investigating the procedures that astandard small to medium-size company needs to complete to start operations legally. These includeobtaining all necessary permits and licenses and completing all required inscriptions, verifications andnotifications with authorities to enable the company to formally operate. The time and cost required tocomplete each procedure under normal circumstances are calculated, as well as the minimum capitalthat must be paid in. It is assumed that all information is readily available to the entrepreneur, that therehas been no prior contact with officials and that all government and nongovernment entities involved inthe process function without corruption.To make the data comparable across economies, detailed assumptions about the type of business areused. Among these assumptions are the following: the business is a limited liability company conductinggeneral commercial activities in the largest business city; it is 100% domestically owned, with start-upcapital of 10 times income per capita, turnover of at least 100 times income per capita and between 10and 50 employees; and it does not qualify for any special benefits, nor does it own real estate.Procedures are recorded only where interaction is required with an external party. It is assumed that thefounders complete all procedures themselves unless professional services (such as by a notary orlawyer) are required by law. Voluntary procedures are not counted, nor are industry-specific requirementsand utility hook-ups. Lawful shortcuts are counted.Cumbersome entry procedures are associated with more corruption, particularly in developing countries.Each procedure is a point of contact—an opportunity to extract a bribe. Analysis shows that burdensomeentry regulations do not increase the quality of products, make work safer or reduce pollution. Instead,they constrain private investment; push more people into the informal economy; increase consumerprices; and fuel corruption.8
1. Historical data: Starting a Business in ChinaStarting a Business dataDoing Business2006Doing Business2007Doing Business2008Rank 128 135Procedures (number) 13 13 13Duration (days) 48 35 35Cost (% GNI per capita) 13.6 9.3 8.4Paid in Min. Capital (% of GNI per capita) 946.7 213.1 190.22. The following graph illustrates the Starting a Business indicators in China over the past 3 years:13131348353513.69.38.4213.1190.2946.7Procedures (number)Duration (days)Cost (% GNI per capita)2005 2006 2007Paid in Min. Capital (% of GNIper capita)9
Page 1 and 2: China
Page 3 and 4: © 2007 The International Bank for
Page 5: IntroductionDoing Business 2008 is
Page 8 and 9: 9. In China, a new property law put
Page 10 and 11: Summary of Indicators - ChinaStarti
Page 14 and 15: 3. Steps to Starting a Business in
Page 16 and 17: The following table shows Starting
Page 18 and 19: 1. Historical data: Dealing with Li
Page 20 and 21: 13. Review of construction drawings
Page 22 and 23: The following table shows Dealing w
Page 24 and 25: 1. Historical data: Employing Worke
Page 26 and 27: The following table shows Employing
Page 28 and 29: 1. Historical data: Registering Pro
Page 30 and 31: 4. Benchmarking Registering Propert
Page 32 and 33: Getting Credit in China: Legal Righ
Page 34 and 35: 3. Benchmarking Getting Credit Regu
Page 36 and 37: Protecting Investors in ChinaOffici
Page 38 and 39: 3. Benchmarking Protecting Investor
Page 40 and 41: Paying Taxes: Tax Payable and Compl
Page 42 and 43: 3. Benchmarking Paying Taxes Regula
Page 44 and 45: Trading Across Borders: Importing a
Page 46 and 47: 3. Benchmarking Trading Across Bord
Page 48 and 49: Enforcing Contracts: Court Efficien
Page 50 and 51: 3. Benchmarking Enforcing Contracts
Page 52 and 53: Closing Business in China: Bankrupt
Page 54 and 55: 3. Benchmarking Closing Business Re
Page 56 and 57: APPENDICESStarting a Business in Ch
Page 58 and 59: - Appointment documents and identif
Page 60 and 61: Cost to complete:Comment:no chargeA
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14 *Receive review of building draw
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Procedure1Request and obtain approv
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Comment:Procedure6The Shanghai Hous
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Procedure14Receive review of buildi
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Comment:No time limits apply for in
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建建建建建建建建建
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Employing Workers in ChinaEmploying
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Registering Property in ChinaThis t
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Procedure3(v) Photocopy of the iden
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Protecting Investors in ChinaThe ta
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Paying Taxes in ChinaThe table belo
Page 84 and 85:
Trading Across Borders in ChinaThes
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