Hainan company registration (FIEs) refers to incorporate a foreign invested enterprise in Hainan. Many investors establish a local presence through a FIE, which helps limit the cost and increase the ease of doing business in China. Setting up an FIE is a common method of creating an operation in Asian countries, especially in China.
Establishing a business in China is not rocket science, investors should choose their corporate structure carefully. Those who want to save time and money should carefully consider the options and seek local expertise for best results.
Representative Office (RO)
An RO serves as an extension of a parent foreign enterprise. It does not form its own separate legal entity; the foreign parent enterprise assumes all legal liability and ownership of property acquired by the RO. When an RO breaches a contract, the foreign company is liable. Similarly, if the RO makes a purchase, the parent owns the purchase.
An RO is also limited in its commercial capacity. It cannot engage in profit-generating activities and can only hire local staff through a qualified labor dispatch agency.
Wholly Foreign Owned Enterprise (WFOE)
A WFOE is an enterprise owned by one or more foreign investors. It assumes its own separate legal personality status, which means it has rights and obligations under the law, such as the capacity to own property and the ability to enter into legally binding contracts.
Investors often set up WFOEs as a limited liability company, with the liability of each investor limited to the amount of capital contributed. In comparison to ROs, WFOEs provide greater freedom in business activities and offer foreign investors 100% ownership and management control.
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Joint Venture (JV)
A JV is a commercial enterprise entered into by at least one foreign investor and one domestic Chinese party. A JV is not merely a merger of two companies: it forms a new legal entity. A JV may take many shapes and forms, and can be tailored to the specific needs of a business. However, there are two common types of joint venture: Equity Joint Venture (EJV) and Cooperative Joint Venture (CJV).
Foreign Invested Partnership (FIP)
A FIP is an unlimited liability business entity that can be set up without any minimum capital. Similar to JVs, it consists of two or more investors coming together for commercial purposes.
However, unlike JVs, an FIP does not form a separate legal entity, it is simply a contractual arrangement between two or more parties for the purposes of doing business together under a common name. The general partner often assumes unlimited liability.
In short, foreign investors entering a new market must first decide on their business strategy and then use this strategy to guide them to choose an appropriate investment vehicle that will allow them to carry out their desired commercial objectives.
Contact us
If you have further queries, don’t hesitate to contact Tannet 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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