Now, your Chinese supplier tells you his company’s registered capital is 100 million CNY. Does this mean this company is a big company or is financially strong? Not necessarily. But why? For that, we need to know what registered capital really means in China.
1. What is the Meaning of the Registered Capital?
Registered capital means the total amount of money that the shareholders have promised to invest in the company. But it doesn’t equal to the meaning that the shareholders have already given all the money to the company. In China, the registered capital can be paid off in a long period of time normally ranging from 10 years to 40 years.
2. How to Find the Registered Capital of a Chinese company?
Ask your Chinese supplier for a business license.
Look for the Chinese characters “注册资本“
Here are some examples:
In this picture, the registered capital is 5 billion USD.
Here “注册资本” means “registered capital“;
- “美元” means “US dollars“;
- “万” means “ten thousand“.
In this picture, the registered capital is 11 million yuan.
Here “万元” means “ten thousand RMB“.
In most cases, the number of the registered capital is written in Arabic numerals, but sometimes the number can also be written in Chinese characters.
In the picture, the registered capital is 50 million RMB.
Here, “伍仟” equals to the Arabic numerals “5000“;
- “万圆” equals to “万元” meaning “ten thousand RMB“；
- “整” means “integer“.
If you want to learn more about the business license, please read this article How to read and verify a Chinese business license.
3. How to Read the Relationship Between the Registered Capital and Chinese Companies？
Is there a Direct Positive Correlation Between Registered Capital and Financial Strength of Chinese Companies?
The answer is no. The registered capital is just a figure that the company declares at will when registering, not the figure that has been paid.
According to Chinese policy, the registered capital can be paid off within 40 years. This means the company does not have to deposit money in its bank account in 40 years. If the company stops its business in 40 years, nobody cares whether its registered capital has been fulfilled or not.
How Can We Tell Whether A Chinese company is Financially Strong?
We can ask your Chinese supplier for its receipt of the paid-up capital (money that the company has paid for the registered capital). Or, you can check a company’s paid-up capital from the website of the AIC (Administration of Industry and Commerce) of China.
In conclusion, the registered capital is not an indicator of a company’s financial strength. You need to check its paid-up capital to make sure the company does have strong finance.
Also, if you want to know a company better (whether it is a big company or has a good background), knowing its registered capital or paid-up capital is not enough. You should also check its staff scale, organization units, patents, trademarks, employment information, etc. If you are having trouble getting these pieces of information from your Chinese supplier, or you are not sure whether your Chinese supplier is lying, you can always order our services.