When it comes to 10 laws in China that impact international business, even experienced entrepreneurs can feel overwhelmed. The Chinese legal system presents unique challenges that directly affect your bottom line and operational success.
Are you planning to enter the Chinese market or already doing business there? Understanding these key regulations isn't just helpful—it's essential. Let's break down the most important legal considerations that could make or break your business ventures in this economic powerhouse.
Want to protect your business interests in China? Learn more about Essential Legal Elements of a Contract in China to ensure your agreements are enforceable.
Key Business Regulations
China's core business regulations govern how businesses are structured, operated, and protected within the Chinese legal system.
Company Law - Corporate Structure And Governance Requirements

China's Company Law sets the legal framework for business entities in the country. As of 2025, it recognizes several business structures, including Limited Liability Companies (LLCs), Joint Stock Companies, and Wholly Foreign-Owned Enterprises (WFOEs).
The law requires specific registered capital amounts that vary by industry and location. Most foreign businesses choose LLCs, which need at least one shareholder and typically require a minimum registered capital of 100,000 RMB.
Your company must appoint a board of directors or executive director, a supervisor or board of supervisors, and a legal representative who holds significant legal responsibility.
Each year, you must submit annual reports to the Administration for Market Regulation by June 30 and complete an annual inspection process.
Foreign Investment Law - Framework For Foreign Business Operations
The Foreign Investment Law, implemented in 2020 with later updates, now serves as the unified framework for foreign investments in China. It replaced three earlier laws, simplifying the regulatory landscape for your business operations.
This law establishes the "national treatment" principle, so your foreign-owned business receives the same treatment as domestic companies in most sectors. However, you must consult the Negative List, which specifies industries where foreign investment is restricted or prohibited.
Key provisions include:
- Protection of intellectual property rights
- Ban on forced technology transfers
- Equal participation in government procurement
- Freedom to repatriate profits and capital
You must register with the Ministry of Commerce and submit to the National Security Review for investments in sensitive sectors. The law also created a complaints mechanism for foreign investors to address unfair treatment.
Contract Law - Legal Enforcement Of Business Agreements
China's Contract Law provides the framework for creating and enforcing business agreements. Your contracts must include clear parties, subject matter, quantity, price or payment terms, and performance timeline to be legally binding.
Written contracts are strongly recommended, as verbal agreements are hard to enforce. Consider these key points:
- Language matters: Use contracts in both Chinese and English, with a provision specifying which version prevails in disputes.
- Dispute resolution: Clearly define whether litigation or arbitration will be used.
- Governing law: Chinese law typically governs contracts executed in China.
Chinese courts increasingly enforce contractual obligations for foreign businesses. Arbitration through bodies like CIETAC (China International Economic and Trade Arbitration Commission) often provides more predictable outcomes.
Chinese courts will not enforce contracts that violate Chinese law or public interest, regardless of the parties' intentions.
Concerned about legal time limits for claims in China? Understand the Statute of Limitations in China's Civil Code to protect your company's rights.
Financial And Intellectual Property Laws
China's legal framework for financial transactions and intellectual property affects foreign businesses. Companies must understand tax structures, currency controls, and IP protection systems to operate successfully.
Tax Law - Corporate Taxation And Repatriation Of Profits
China charges a standard corporate income tax rate of 25% on both domestic and foreign companies. High-tech enterprises and certain industries in specific economic zones may qualify for reduced rates of 15%.
Repatriating profits requires careful planning due to withholding taxes. When transferring profits outside China, a 10% withholding tax usually applies to dividends paid to foreign investors. Tax treaties may reduce this rate.
Tax authorities strictly enforce compliance. You must keep proper documentation and follow special rules for transfer pricing in related-party transactions. Non-compliance can lead to penalties and extra tax assessments.
Recent tax reforms have simplified some procedures. Work with tax professionals who understand both Chinese regulations and international tax implications.
Foreign Exchange Control - Currency Conversion And Capital Flow Rules
China strictly controls its currency, the yuan (RMB), through the State Administration of Foreign Exchange (SAFE). All foreign currency transactions must follow SAFE regulations.
You must open separate accounts for different types of funds:
- Capital accounts for investment funds
- Current accounts for operational expenses and trade
To convert large amounts of RMB to foreign currency, you must provide documentation proving a legitimate business purpose. Routine profit repatriation is allowed but must follow prescribed procedures.
The annual quota system limits how much currency individuals can convert. For businesses, there's no fixed limit, but transactions over $50,000 receive more scrutiny.
Recent reforms have eased some restrictions in free trade zones like Shanghai and Hainan, but overall, the system remains tightly regulated.
Trademark Law - Protection Of Brands And Logos
China uses a "first-to-file" trademark system. Whoever registers a trademark first gets legal rights, regardless of prior use.
Registration is crucial. Register your trademarks with the China National Intellectual Property Administration (CNIPA) before entering the market. Consider registering:
- Your brand name in both English and Chinese characters
- Logos and visual identifiers
- Product names and slogans
Trademark protection lasts 10 years and can be renewed indefinitely. Specialized IP courts in major cities have improved enforcement.
The 2023 amendments to China's trademark law increased penalties for infringement. Authorities now more actively reject bad-faith trademark applications. Courts can award damages up to five times the actual loss in serious cases.
Patent Law - Innovation Protection And Technology Transfer
China's patent system protects three types of innovations:
- Invention patents (20-year protection)
- Utility models (10-year protection)
- Design patents (15-year protection)
Obtaining invention patents usually takes 2-5 years. Utility models and designs are granted more quickly, usually within 1 year.
China closely reviews technology transfer agreements. Agreements transferring technology to Chinese entities must not unreasonably restrict the Chinese party's research capabilities.
Recent legal changes have increased statutory damages for patent infringement. Maximum statutory damages now reach 5 million yuan (about $750,000).
Filing patents in China is important because Chinese courts rarely enforce foreign patents. Develop a comprehensive IP strategy before entering the market.
Employment And Trade Regulations
China's regulatory framework for business operations includes complex employment laws, data security requirements, and strict import/export procedures that foreign companies must navigate to ensure compliance.
Labor Law - Worker Rights And Employment Requirements

China's Labor Contract Law requires written contracts for all employees within one month of hiring. If you fail to provide contracts, you must pay double wages as penalties.
Standard work hours are limited to 8 hours daily and 44 hours weekly. You must pay overtime at 150% for weekdays, 200% for weekends, and 300% for public holidays.
Foreign businesses must contribute to China's social insurance system for both Chinese and foreign employees. This includes pension, medical, unemployment, work injury, and maternity insurance.
Employee termination is strictly regulated. You must give 30 days' written notice and severance pay based on years of service. For mass layoffs (20+ employees or 10% of workforce), you must notify the government and consult the union.
Probation periods are capped at six months. Minimum wage standards vary by region and are updated regularly.
Cybersecurity Law - Data Protection And Online Business Rules
China's Cybersecurity Law requires businesses that collect user data to store it on servers located within China. Cross-border data transfers need security assessments and regulatory approval.
You must implement real-name verification systems for users of online services. Most digital platforms cannot use anonymous accounts.
Network operators must categorize data by security levels and apply the right protection measures. Critical information infrastructure operators must meet additional security requirements and audits.
Key compliance requirements:
- Regular security risk assessments
- Data breach reporting within 72 hours
- User consent for data collection
- Emergency response plans
The Personal Information Protection Law (PIPL) gives individuals rights to access, correct, and delete their personal data. Violations can result in fines up to 50 million yuan or 5% of annual revenue.
Customs Law - Import/Export Procedures And Tariffs
China uses the Harmonized System (HS) for classifying imports and exports. You must obtain the correct HS code for your goods, as it determines duties and restrictions.
Import licenses are required for restricted categories including technology products, agricultural goods, and certain raw materials. The application process usually takes 10-15 business days.
Common import documents:
- Commercial invoice
- Bill of lading/airway bill
- Packing list
- Certificate of origin
- Quality inspection certificates
China operates specialized customs zones such as Free Trade Zones and Export Processing Zones that offer tariff exemptions and simplified procedures.
Value-added tax (VAT) applies to most imports at 13% for general goods and 9% for necessities. Consumption tax applies to luxury items.
E-commerce imports under 5,000 yuan qualify for simplified customs clearance with reduced documentation requirements.
Facing unexpected business disruptions? Discover how Force Majeure in China affects your contractual obligations during unforeseen circumstances.
Conclusion: 10 Laws in China
Understanding these 10 laws in China provides a foundation for your business success in this complex market. Remember that regulations change frequently, so staying informed is crucial for compliance.
Working with legal experts who specialize in Chinese business law can help you navigate potential pitfalls and capitalize on opportunities. Don't let legal uncertainties hold back your China market strategy.
Want to learn more about recent legal developments? Read our detailed analysis of the newly updated China Company Law in our article: China Company Law 2024: Key Changes for Foreign Businesses.
Frequently Asked Questions: 10 Laws in China
What are the main laws in China?
China's main business laws include the Foreign Investment Law, Company Law, and Contract Law. The 2020 Foreign Investment Law aims to create a level playing field for foreign investors. Labor Law, Cybersecurity Law, and Anti-Monopoly Law regulate employment, data security, and fair competition.
What is the common law in China?
China follows a civil law system based on written statutes, not common law. Court decisions do not create binding legal precedents. The National People's Congress creates laws, while local regulations vary significantly between regions.
What is the law in China about kids?
China strictly prohibits employing children under 16 years old. The Three-Child Policy replaced previous family size limitations. Businesses must ensure products and services for children meet strict safety standards.
What are the religious laws in China?
China officially recognizes five religions: Buddhism, Taoism, Islam, Catholicism, and Protestantism. Businesses should avoid religious content in marketing materials. While religious freedom exists in the constitution, practical limitations apply to religious expressions.
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