Hainan company incorporation also refers to Hainan corporate formation or Hainan business setup. Hainan is striving to establish the national largest free trade port by 2020, and the government has launched a number of preferential policies to encourage and attract investment. If you are going to set up a business in Hainan, one of the first steps will be the determination of the business structure. Investors need to choose their corporate structure carefully. Those who select the wrong structure may lead to unnecessary business constraints, costs, and regulatory scrutiny.
Establishing a business in China is not that easy considering the different national conditions, if investors want to save time and money, then they should carefully consider the options and seek local expertise for best results. The following are the common types of business for foreign investors in Hainan.
I. Representative Office (RO)
If you want to enter China, you should pick the right entity which will allow you to do all the business related activities you want. For certain activities a Representative Office (RO) will be the right choice. Usually an RO is used as a basis for doing market research within China and other not for profit seeking activities like meeting and researching, acquiring suppliers and potential customers, etc. Its main function is to facilitate the activities of a foreign company in China, thus being the easiest way to officially step into the Chinese market.
II. Wholly Foreign Owned Enterprise (WFOE)
The Wholly Foreign Owned Enterprise (WFOE or WOFE) is a Limited liability company wholly owned by the foreign investor(s). It is a common investment vehicle for mainland China-based business wherein foreign parties (individuals or corporate entities) can incorporate a foreign-owned limited liability company. The unique feature of a WFOE is that involvement of a mainland Chinese investor is not required. Commonly, there are three different type of WFOE: manufacturing WFOE, Consulting WFOE and trading WFOE.
III. Sino-Foreign Joint Venture (JV)
A Joint Venture is a commercial enterprise entered into by at least one foreign investor and one domestic Chinese party. Forming a joint venture in China can be a very risky endeavor for companies who do not have a formal relationship with their potential partner or extensive experience in working in China. A JV (either an Equity Joint venture or Cooperative Joint venture) is typically best formed when proper diligence is made, and the foreign entity is attempting to enter a heavily restricted industry. In this sense, the Chinese partner’s market knowledge and resources are often crucial to successful expansion into China.
IV. Foreign Invested Partnership Enterprise (FIPE)
The Foreign Invested Partnership Enterprise (PE) is a unlimited liability business entity without minimum requirements on registered capital. The term partnership enterprise refers to general partnerships and limited partnerships which may be established within China by individuals, legal persons and other organizations. It is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested. FIPEs are a less common structure for foreign investors, because investors need to assume more liability under this model.
It is important to analyze the advantages and disadvantages of each foreign investment vehicle structure before set up your business. With 19 years of development, Tannet can help you establish your business in mainland China and Hong Kong and Macau SARs, as well as Taiwan. We have branches in Beijing, Tianjin, Shanghai, Guangzhou, Shenzhen, Dongguan, Xiamen, Quanzhou, Yiwu, Nanchang, Chengdu, Hainan, Hong Kong etc. Our experienced consultants will be glad to assist and advice on how to approach your particular challenge.
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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 86-755-82143512, 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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