What is the minimum amount of capital needed to establish a foreign-invested commercial enterprise (FICE) in China?

While in theory the new Company Law suggest that a FICE may be established with US$1 of capita, in practice, this is not a good idea for the following reason: a FICE’s capital should cover its pre-operational expenses (including rental fees, tax payments, salaries, etc.) for one year, until the entity is able to generate sufficient profit to run its operations independently (the minimum capital required for FICE approval is generally between RMB 500,000 and RMB 1 million). If a company injects an insufficient amount of capital to cover its initial operations, it may encounter problems if more capital is required later on. For foreign-invested enterprises (FIEs) to increase capital and inject money beyond the capital amounts, China’s stringent foreign exchange regulations require that they communicate with various governmental departments and undergo tedious procedures, such as obtaining a capital verification report. Delays in obtaining additional capital would negatively impact company operations. At this stage, the Company Law amendment has greater impact on domestic companies than FIEs, as the former can specify any capital amount as long as it is approved by the Administration of Industry and Commerce (AIC).