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Set-Up of Chinese Domestic-Funded Enterprises, Representative Offices, Wholly Foreign Owned Enterprise (WOFE), and Equity Joint Ventures for Foreign Businesses

Representative Office

Establishing a representative office in China is a common entry strategy. It should be noted that technically representative offices may not engage in direct profit-making activity. Such offices may, however, engage in consulting, market research, and networking. Thus, they might be thought of as cost centers that are a first step in your more formal entry in this market at a later stage. Registration of your office is required in order to lawfully employ Chinese nationals, to open a bank account, to import personal effects duty free, and to import office equipment without an import license, to obtain direct telecommunication lines, to display signs and use business cards identifying the company’s presence in China, and to secure a multiple entry visa. However, because of the need to renew this entity each year, pay about 10% of your gross expense as taxes each year and other cost intensive and regulatory issues – coupled with the substantially lower Wholly Owned Enterprises regulations as the Chinese economy matures – many clients are choosing to skip the step of a Representative Office entirely. When considering entering this market, call us for an evaluation of which may be the most appropriate vehicle for your needs.

Wholly Foreign Owned Enterprise

The Wholly Foreign Owned Enterprise (“WOFE”) or Foreign Invested Enterprise (“FIE”) is simply a Chinese corporation that is 100% owned by a foreign party. As no Chinese joint venture partner is required, most technology or specialized manufacturing companies choose this as their preferred entity.

A WOFE can sell into the domestic market – manufacture for export only – or both. Some technology and components can be imported duty free. And finally, there are substantial tax holidays in certain favored industries. Virtually any technology company can qualify for these additional tax breaks. Of course, one need not be a manufacturer to take advantage of this flexible structure.

Foreign investors may focus on the following fields for having a WOFE or FIE : wholesalers, retailers, agents, hotel, logistics companies, restaurants, parcel post service, gas stations, and wholesale & retail of publications, etc.

Equity Joint Ventures

There are several areas where a Chinese partner is still required here. These industries are specially regulated, as they are in most countries. Energy, telecommunications, and other similar core industries are still challenging investments in any jurisdiction. Should one of these be on your horizon, please contact us directly so we can discuss a range of solutions to suit your needs.

Some of the general characteristics of a joint venture are as follows:

Equity joint venture may only be terminated upon the agreement of the investors an approval of the original investment approval authority. From the viewpoint of the Chinese Government, equity joint ventures are the preferred form of investment.

Foreign Employee Services—Chinese Work Permits, Work Visas and Residency for Foreigners in China.

When you send foreign staff and their families into China for a long term stay, surly you need our service to help your staff to get work permit, work visa and residency in China. Our service even includes arranging a primary entry visa and a hotel for that first night in China for your staff and their family, to minor misunderstandings, the more serious medical evacuation, birth, death, and others matters.