China company registration is the brightest opportunity for people to open their own company in China. Since the late 1970s, China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role. With favorable policies and vast market opportunities, China is an ideal place to set up a business. Tannet Group Limited can assist you in the process of registering a company in China. Below is a guide for anyone who wants to invest in China.
Generally, there are four major forms of business entities in China, namely,
1. Wholly Foreign Owned Enterprises (WFOEs);
2. Foreign Invested Commercial Enterprises (FICEs);
3. Representative Offices (ROs);
4. Joint Ventures (Equity Joint Ventures and Cooperative Joint Ventures).
Comparison between Four Forms
(1) WFOE is an independent legal entity in China with limited liability, wholly owned by one or more foreign investors and established entirely with foreign capital. It has the following advantages:
Freedom for implementing policy matches with its parent;
Ability to carry out business in China while “RO” prohibited;
Capability to convert RMB to US dollars and remit out of China;
Freedom for import and export own product;
Greater efficiency of management;
Full controls of its resources;
Technology and technical know-how no need to transfer or share.
(2) Foreign-invested commercial enterprises, commonly known as FICE, are fast becoming an ideal way for foreign investors to enter China’s Mainland market. FICE can carry out a wide range of activities, including wholesale, retail and franchising trade activities in China. The advantages of FICE are as follows:
Can sell in RMB to local Chinese customers and issue fapiaos;
Ability to benefit from VAT rebates if exports are done through the FICE;
Can take control of the supply chain and expand the range of suppliers in China by purchasing in RMB;
Can establish and operate branch offices anywhere within China;
Can be 100 percent owned by a foreign entity;
Can hire directly;
Has no annual turnover or minimum asset requirements.
(3) Representative office (RO) is established for engaging business liaisons, quality control, product promotion, market research, exchange of technology and other permitted activities in China. Usually an RO is used as a basis for doing market research within China and other not for profit seeking activities like e.g. meeting and researching/ acquiring suppliers and potential customers. It is thus the easiest way to officially step into the Chinese market but also a quite efficient one, if you just want to improve supplier or customer relations quickly.
(4) Joint-Ventures in China can either take an Equity Joint-Venture (EJV) structure or a Contractual Joint-Venture (CJV) structure. Equity Joint-Venture consists in a new company funded by two or more partners. Liabilities and profits are proportionate to the amount of money they have invested in the first place. The EJV usually have an independent life, regarding the partners’ operations. However, certain conditions, such as non-competition agreements, usually restrain partners’ activities that could harm the EJV.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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