Local gov'ts pave way for new wave of small firms

A producer of displays in Dongguan, Guangdong province. The city has set up a cluster registration company to serve small local firms. (Photo: China Daily/Chen Fan)

Streamlined process, financial support help startups turn their ideas into reality

Yu Xu, a migrant worker in Dongguan, Guangdong province, was able to start a business two years earlier than he expected after the local government simplified its commercial registration procedures.

Since last April, e-commerce companies in Dongguan have been allowed to register their offices at the location of Dongguan Thunion Cluster Registration Hosting Co Ltd. The change has saved local entrepreneurs, especially those running small businesses, money that would otherwise have been needed to rent an office or a brick-and-mortar store.

Dongguan Thunion undertakes the registration procedures on behalf of companies, which is a big help for new business owners, said Yu, who started an online business selling industrial lubricants in May that has only five employees.

"I gave the hosting company my identity card and registration documents and received the business license a few days later," he said. "It would have taken me a long time to do it myself."

Dongguan Thunion is China's first such company. It is also an innovative initiative of the local government to lower the threshold for people to start micro-sized and small businesses.

Dongguan is one of the four pilot cities in Guangdong designated by the State Administration for Industry and Commerce in 2012 to reform their commercial registration systems. The other three are Shenzhen, Zhuhai and Foshan. The reforms were expanded nationwide last March.

Another part of the reform is the concept of a zero-capital company, meaning that companies can be formed without paid-in capital.

"The biggest barriers to startups are capital and having an office for registration, as well as other items for approval needed to get a business license," said Zhang Zhiyun, an official in charge of commercial registration at the Dongguan Administration for Industry and Commerce.

"Reforms have reduced the paid-in capital required for registration to zero, and many items that were needed prior to license approval can now be submitted afterward," Zhang said. "We also made a breakthrough in allowing multiple business licenses to be registered at one address."

Dongguan Thunion is a breakthrough initiative, with which the city hopes to "stimulate the vitality of the e-commerce industry", Zhang said.

As a manufacturing base in the Pearl River Delta, Dongguan has an edge in developing e-commerce, based on its vast supply of products and well-developed logistics industry.

"Dongguan has well-made products, but it doesn't have established strong brands of its own. E-commerce can help original equipment manufacturers in the city to transform and upgrade by selling their originally designed products online to gradually build their own brands," said Lin Jianqiang, managing director of Dongguan Thunion. "Online marketing costs much less than traditional marketing through physical stores."