Key practical points:
• The owner is a single individual with unlimited liability for the firm's debts from personal assets.
• Simpler to form and run than a limited company, but with higher personal risk.
• It has no separate legal personality like a limited company.
• Foreigners forming this type may be restricted; the common foreign vehicle is a wholly foreign-owned enterprise (WFOE).
• On winding up, debts are paid from firm assets, then the owner's assets if needed.
🏢 Company setup
Sole Proprietorship Enterprise Law · Yalla China
中华人民共和国个人独资企业法 / Sole Proprietorship Enterprise Law
Enacted: 1999-08-30 ✅ Effective: 2000-01-01
📝 Overview
A law on businesses owned by one individual, where the owner bears unlimited liability for debts.
This is general information only, not legal advice. For your specific case, consult a licensed lawyer.
📜 The law text / key provisions
💬 Practical reading
💬 This is a general reading/opinion for orientation — not the official legal text nor legal advice.
A sole proprietorship is easy but risky: if it fails, its debts follow your personal assets. As a foreigner you will more likely use a wholly foreign-owned enterprise (WFOE) to ring-fence liability. Consult an accountant before choosing the form. General orientation, not legal advice.
📎 Official source
npc.gov.cn
🕒 Updated: 16 March 2026