Hainan company registration is hot choice among investors both from home and abroad these days. Being the southernmost province and the largest Special Economic Zone in China, Hainan now is embracing a new opportunity for growth. Whether you’re from the United States or Europe, if you’re looking to start a company in Hainan, or other parts in mainland China, you’ll find that the company registration process is quite different in China. For foreign business start-ups, there are four common types of company registration.
I. Wholly Foreign-Owned Enterprise (WFOE)
Perhaps the most common type of foreign business entity in China is WFOE, which is also the most lucrative option for foreigners. As the name suggests, a WFOE is solely established and owned by foreign entities. It doesn’t require the direct involvement of a Chinese investor or partner. Foreign investors can hold the complete control of all the business operations. Setting up a WFOE requires a registered foreign capital which is agreed upon and registered with the authorities.
II. Joint Venture (JV)
Joint Venture is a unique type of company registration in China since it requires the involvement of a foreign entity as well as a local Chinese party. The history of JV goes back to when China first opened itself up to foreign investment. Basically, if a foreign company wanted to do business in China, they needed to partner up with a local Chinese company or person.
III. Representative Office (RO)
A representative office, as the name suggests, is only opened for the purpose of representing a foreign company in China. The procedure for opening up a representative office in China is fairly simple and no registered foreign capital is required. However, there are restrictions on business operations that can be performed through a representative office. Nevertheless, it remains a lucrative choice for companies only looking to conduct market research, meet new clients and suppliers, and carry out brand marketing.
IV. Foreign Invested Partnership Enterprise (FIPE)
Foreign invested partnership enterprise, abbreviated as FIPE, is an unlimited liability business entity set up by more than 2 (including 2) foreign enterprises or individuals; or by foreign enterprises or individuals and Chinese individual, legal person and other organizations within the territory of China.
FIPE is an entity without minimum requirements on registered capital. A partnership in the People's Republic of China is a business entity governed by the Partnership Enterprise Law passed by order of the President of the People's Republic of China to authorize and govern partnership enterprises.
Choosing the right corporate structure is paramount and can mitigate unnecessary business constraints, costs, and regulatory scrutiny. These challenges handicap growth following market entry and can undermine a company’s plans to expand. Before setting up a new business in Hainan, it is wise to consult a professional adviser on the latest laws and regulations on the relevant requirements.
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.
Previous：Hainan Company Post-registration Services
Next：Hainan Company Registration Package