A staffer in the business service hall of the Shanghai free trade zone passes a business registration certificate to a successful applicant. Photo: CFP
 

 

A number of new firms have opened in South China's Guangdong Province and the Shanghai free trade zone, thanks to a pilot reform program to ­facilitate business registration, the head of the State Administration for Industry and Commerce (SAIC) said at a press conference Thursday.

The reform includes cancellation of the minimum capital requirement for startups, replacing the existing annual check mechanism with annual filing and information disclosure, and allowing residential buildings to be used as offices.

Since Shenzhen and Zhuhai, both in Guangdong, joined the pilot program on March 1 this year, the number of newly created firms in the two cities has soared by 98.51 ­percent and 52.61 percent, respectively, compared to the same period last year, said Zhang Mao, director of the SAIC.

Currently four cities in South China's Guangdong Province - Shenzhen, Zhuhai, Dongguan and Shunde - have joined the new business registration program.

Shunde and Dongguan have seen a rise of more than 20 percent in the number of newly registered businesses since they implemented the new measures in July and December 2012, ­respectively, according to Zhang.

The Shanghai free trade zone was chosen as another pilot area for the program, and the number of new businesses opening in the zone since its establishment on September 29 has risen fivefold compared with the same period of last year, Zhang said.

The State Council decided at a meeting on October 25 to push forward with reform of business registration procedures, including cutting unnecessary administrative approval and facilitating business creation to boost the vitality of small firms, which create 90 percent of the country's jobs.

"Experience in the pilot areas has shown that this reform is beneficial for optimizing the business environment, and can spur the vitality of the market,"  Zhang noted. "It played an important role in bolstering economic recovery in the third quarter."

Nationwide rollout of the reform is expected after lawmakers amend the existing Company Law and relevant regulations, he said.

The new policy will greatly ­reduce costs for startups, especially for young entrepreneurs, Zhong Jigang, chairman and executive director of a ­Beijing-based green energy firm, told the Global Times Thursday.

"I might start a business again [under the new policy]," Xiao Yongchang, a returned student from overseas, told the Global Times on Thursday.

Xiao set up a clean technology firm in 2007 but closed it two years later, partly because he was exhausted from dealing with different market regulators, and felt the various requirements were time-consuming and costly.

However, Xiao said that the market regulators need to have a more open mindset for there to be a real improvement in the business environment for new firms.

Some market watchers have also expressed concern that the lowered ­requirements for new businesses could give rise to possible fraud and chaotic competition.

But the SAIC will blacklist any firms that violate the law and make the list public, Zhang said, noting that the firms would also face heavy fines.

At the same time, companies that operate properly will be subject to fewer inspections by the SAIC.

Even though entrepreneurs are not obliged to have a minimum amount of capital for registration under the new reform, businesses starting with too little money will not be considered credible by potential customers, Zhong Jigang noted.