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Foreign investors can set up holding companies in China to hold their investments in FIEs and to provide services to their subsidiaries.

Required qualifications

To set up a holding company, foreign investors are subject to certain requirements:

  • The investor shall prove good financial standing and its financial ability to establish and fund a holding company.
  • The capital contribution shall be affected by the establishment of new subsidiaries in China and/or the increase of the registered capital of existing subsidiaries.
  • A foreign investor must have a total asset value of no less than USD 400 million in the preceding year and must have previously established an FIE to which it has already paid up more than USD 10 million in registered capital. Under an alternative requirement, the foreign investor must have established at least 10 FIEs in China, representing a paid registered capital of more than USD 30 million; [1]
  • In the situation of a joint venture holding company, a Chinese investor must have good credit standing and necessary economic strength, with a total asset value of no less than RMB 100 million in the preceding year
  • The foreign investor shall be a foreign company, enterprises or economic organization. If there are two or more foreign investors, at least one foreign investor holding major equity interests shall comply with the second requirement as mentioned above.

[1] From local perspective, Shanghai Municipality has relaxed the requirements for establishing a holding company in Shanghai since September 1, 2019, and now the following requirement has been lifted: the total assets of the foreign investor for the previous year before the application shall be not less than USD 200 million, as well as the requirement that the requirement for domestic paid-in registered capital or the number of investment enterprises.  For more details, please find: Several Opinions of the Shanghai Municipal People’s Government on the City Promoting the Development of Regional Headquarters of Multinational Companies.

Permitted operations  

The holding company’s business scope is quite restricted as it is strictly an investment and services company, which may not engage, for example, in manufacturing operations.

The permitted operations of a holding company include the following:

  • Investments operations: a holding company can invest in areas where foreign investments are encouraged or permitted, for example, in R&D centers for new products and high technology.
  • Services operations: a holding company can provide services and consultancy services related to business operations to its subsidiaries in China, Foreign Exchange Balance, Technical supporting, training for employees, and intra-enterprise personnel management. It may assist its subsidiaries to seek loans and providing a guarantee for them.
  • Establishment of R&D centers: a holding company can establish research and development center or department in China to engage in the research and development of new products and high and new technologies, transfer of the research and development results, and provision of the corresponding technical services.
  • Consulting operations: a holding company can provide consulting services to the investors and its affiliated companies, such as market information, investment policies, and other reports related to its investments.
  • Undertaking outsourcing business: undertaking the service outsourcing business of its parent company and affiliated companies

Advantages and disadvantages


  • Centralized coordination of operations, such as marketing, distribution, training, and other administrative functions;
  • Higher levels of debt financing than other investment options;
  • The status of regional headquarters: a holding company can directly apply to be recognized as regional headquarters.


  • Restrictions in operations;
  • High requirements for its investor: the investor shall comply with the requirements mentioned above.

-> This article may also be of interest to you : Foreign Invested Partnerships in China – Investment Options

To know more, download our legal handbook related to foreign investment in China…

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