Business Scope of Chinese Companies
- Roman Verzin
- Apr 25
- 3 min read
Updated: Jul 9
In China, every company must define its business scope during registration.
You can’t just say “any legal business.” It doesn’t work like that. This isn’t Singapore. In China, you can only operate within the activities listed on your license. This list is called your Business Scope (in Chinese: 经营范围).
Why does this matter?
Because your business scope controls:
What kind of business you’re allowed to do
What type of invoices (fapiao) you can issue
What licenses and tax registrations you can apply for
Whether banks, customs, and regulators accept your operations
Let’s say your scope only mentions “consulting.” But you start importing goods. You won’t be able to:
Register with customs
Export or import legally
Claim VAT refunds
Or explain your transactions to the bank
In China, scope = permission. If your scope doesn’t cover an activity, you’re not allowed to do it. No scope — no permission.
Now you might ask: why not list everything just in case?
Unfortunately, that approach doesn’t work. If your scope looks too wide or generic, the authorities may reject your application. It looks suspicious — and that means delays, rejections, or even a failed registration.
So how do you get it right?
Here’s our advice:
✅ Match your real business
Don’t just copy another company’s template. Start with what your company will actually do.
✅ Use legal terms in Chinese
The authorities only check the Chinese version. Your consultant or agency must phrase it using proper legal language.
✅ Keep it flexible — but not too broad
Find a middle ground. Don’t go too narrow. But don’t try to include every possible scenario.
✅ Start with core activities — expand later
You can change your scope later if needed. It’s a formal amendment, and may take from 2 weeks to 2 months. So it’s better to get the key parts right from the beginning.
Here are two real examples we’ve used for clients:
Trading Company Scope:
Wholesale and import/export of consumer electronics, household appliances, clothing, and accessories; warehousing and logistics services; related consulting services.
Consulting Company Scope:
Enterprise management consulting; business information consulting; supply chain management services; marketing services; import and export of goods and services.
3 hidden risks you should know
1. Business scope is not enough for some industries
Some industries require extra licenses — even if listed in your scope. This includes:
Food
Medical devices
Education
HR services
Fintech
For example, writing “import of food” in your business scope does not allow you to legally import food. You’ll still need a separate license. We’ll cover this in more detail in Part 6 of this guide — about licenses and industry regulation.
2. Your scope affects your tax classification
In China, VAT and other taxes depend on the nature of your business. And your business scope is what defines that nature.
Consulting businesses usually pay 6% VAT
Trading businesses typically pay 13% VAT
Some service sectors may qualify for special policies or rates
If your scope doesn’t match your invoices, the tax bureau may reclassify you — or impose penalties.
3. Banks check your scope — and they take it seriously
When your company receives or sends payments, the bank checks whether the transaction fits your registered scope.
If your scope says “consulting,” and you receive $80,000 for goods — expect a call from the bank. If you try to send a cross-border payment, but your scope only allows domestic activity — the bank may reject the transfer.
Banks in China are risk-sensitive. And they follow strict rules from the foreign exchange authority — SAFE (State Administration of Foreign Exchange).
We’ll explain more about banking rules in Part 7 of this series.
Final thoughts
Business scope in China is not just a line of text. It’s what defines what your company can legally do — and how smoothly it can operate.
If you get it wrong, you may face issues with taxes, banks, customs, or even your own ability to invoice clients. If you get it right, you remove many unnecessary barriers before they even appear.
We recommend working with a local lawyer or licensed consultant to draft the Chinese version of your scope properly.
At United Suppliers Group, we help international founders choose the right scope based on their real business plans — and local compliance rules.
Want to make sure your setup won’t break later? Reach out to us for a private review — or keep reading the next part of the guide.
