China business incorporation is one of the most concerned issues among investors, as its promising huge potential market and low-costs of workforce around the world. For an investor, you are free to choose one suitable type of business you plan to start.
Business Incorporation in China- Main Types
There are three main types that can be set up by a foreigner in China:
A. Wholly-owned Foreign Enterprise (WOFE);
B. Representative Office (RO);
C. Joint Venture (JV).
Business Incorporation in China - Features
1. Wholly-owned Foreign Enterprise (WOFE)
Wholly-owned Foreign Enterprise (WOFE) refers to a limited-liability corporation organized by foreign nationals and capitalized with foreign funds. There are following advantages you could find for a WFOE:
a. An advantage is the ability to uphold a company’s global strategy free from interference by Chinese partners;
b. Increased protection of trademarks and intellectual property, in accordance with international law;
c. Shareholder Liability limited to original investment.
2. Representative Office (RO)
A Representative Office (RO) means a branch office of a foreign company set up in China. Please be noted of the following functions of a RO:
a. It carries out market contacts and research for its headquarters, and assists in developing its business in other countries
b. Representative offices can not issue any invoices, and thus gain any income by itself. All expenses of a representative office have to be fully funded by the company headquarters
c. The purpose of a representative office to liaise with businesses and customers from China / Asia on behalf of its parent company. It is restricted to conduct only indirect operational activities, for example:
(1) Business liaison;
(2) Introduction of products for sales purposes;
(3) Market Research.
3. Joint Venture (JV)
Joint Venture (JV) is a type of business that foreign businesses or individuals to establish a joint venture together with Chinese business. Generally, a foreign investor chooses this type of business due to the features of JV as below:
a. Taking advantage of local resources like in existing facilities and workforce, already existing relationships in China and existing distribution and sales channels, and so on;
b. Ability to enter into industrial sectors that are excluded from WFOE, which play an essential part in Chinese people’s livelihood.
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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