Setting Up a Philippine Business as a Chinese Investor

Most of the economy is open to you

Trading, manufacturing, import and export, technology, most services — many Philippine activities are open to full foreign ownership, and a Chinese investor can hold 100% of the equity of a company doing them. A periodically updated negative list reserves some activities to Filipinos and caps the foreign share in others; confirming the current list against your exact proposed activity is the first task of the engagement. Most ventures need no workaround at all — the people who acquire criminal exposure are usually the ones who built one anyway.

Retail is its own regime

Selling directly to Philippine consumers is retail trade, and retail has its own statute. Republic Act No. 11595 (2021), amending the Retail Trade Liberalization Act, opened retail to foreign investors subject to a capital floor:

(a) A foreign retailer shall have a minimum paid-up capital of Twenty-five million pesos (P25,000,000.00);

The same section requires that the capital stay in the country:

The foreign retailer shall be required to maintain in the Philippines at all times the paid-up capital of Twenty-five million pesos (P25,000,000.00), unless the foreign retailer has notified the SEC or the DTI, whichever is appropriate, of its intention to repatriate its capital and cease operations in the Philippines. The actual use in Philippine operations of the minimum paid-up capital shall be monitored by the SEC, or by the DTI, whichever is appropriate.

Wholesale and business-to-business selling is a different classification. Whether your model is retail, wholesale, or a mix is a legal call we make early, because it decides how much capital you must show.

Whatever the company sells, land is different

The restriction that survives every liberalization is land. The 1987 Constitution, Article XII, Section 7, draws the line:

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.

For corporations, being qualified means being at least 60% Filipino-owned. So even a lawfully 100% Chinese-owned operating company cannot take title to the land under its own shop, warehouse or plant. The standard, lawful answer is to lease the premises long-term and own the buildings and improvements the business puts up.

The line you cannot cross

The workaround everyone has heard of — Filipino incorporators on paper, Chinese money and Chinese control in fact — is not a grey area. Commonwealth Act No. 108, the Anti-Dummy Law, makes it a crime for both sides:

Section 1. Penalty.— In all cases in which any constitutional or legal provisions requires Philippine or any other specific citizenship as a requisite for the exercise or enjoyment of a right, franchise or privilege, any citizen of the Philippines or of any other specific country who allows his name or citizenship to be used for the purpose of evading such provision, and any alien or foreigner profiting thereby, shall be punished by imprisonment for not less than five nor more than fifteen years, and by a fine of not less than the value of the right franchise or privilege, which is enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos.

And the courts test control, not paperwork. In Register of Deeds of Rizal v. Ung Siu Si Temple (G.R. No. L-6776, May 21, 1955, En Banc), the Supreme Court refused registration of land to a Chinese-controlled association whose paperwork was in order:

The fact that the appellant religious organization has no capital stock does not suffice to escape the Constitutional inhibition, since it is admitted that its members are of foreign nationality. The purpose of the sixty per centum requirement is obviously to ensure that corporations or associations allowed to acquire agricultural land or to exploit natural resources shall be controlled by Filipinos; and the spirit of the Constitution demands that in the absence of capital stock, the controlling membership should be composed of Filipino citizens.

A corporation with token Filipino shareholders and Chinese control fails the same test, and conviction carries imprisonment, a fine and forfeiture of the business itself — the full analysis is on our Anti-Dummy Law page.

How a lawful setup typically runs

In our experience the sequence is: confirm the activity against the current negative list; incorporate with the Securities and Exchange Commission on a capital structure that matches the activity; document the inward remittance of your capital so the paid-up figures are provable from day one; then secure the licences your industry needs. Resident directors or a resident agent, where expected, are structured lawfully as a matter of practice; work visas for your Chinese managers are a matter we coordinate. One caution: how you move funds out of China is a matter of Chinese law and your bank's rules — take advice on the China side. Once the company exists, most clients keep us on a corporate retainer; if the venture involves buying property, our due diligence runs first. We work with clients abroad daily — book a consultation and bring your business plan.

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