For foreign enterprises there are three main types of companies in China. Each type has its advantages as well as crucial disadvantages. Before investing in China, each company has to be sure what goals it wants to reach and how long it wants to stay in the Chinese market.
→ Representative office (RO)
Setting up a representative office is for many companies the first and easiest step to enter China. It allows your company to test a new market with a small investment and low risk.
The main activities of a Rep Office are the sourcing of products, quality control, and general liasion activities with the Head Office.
Representative Offices have limited capabilities, but on the bright side there is no minimum capital requirement, lesser taxation and allows your company to promote your business in China while keeping main operations consolidated in another country.
In China, Rep Offices cannot hire Chinese nationals directly. They have to go through a local human resources firm, like HROne.
HROne can help you open a RO in China, and hire the Chinese workforce your company needs.
Time to establish: 3months
→ Joint Venture (JV)
Joint Ventures are a common business type for foreign enterprises operating in China. A Joint Venture (JV) is a form of foreign invested enterprise (FIE) that is created through a partnership between foreign and Chinese investors. In some areas, Chinese policy only allows foreign investors do business through a JV.
The Chinese company usually provides the labor, land use rights and factory buildings, while the foreign company brings in the technology, key equipment, and the capital. Bringing your business to China through a JV will give you the advantage of your partner's knowledge of the Chinese market.
There are two types of JVs in China: the equity JV (EJV) and the cooperative JV (CJV). They are very similar, but have different implications for the structuring of your entity in China.
A specialist like HROne can guide you as to which structure is better for you, and can help with the consolidation of your JV, as well as to hire the personnel you need.
Time to establish: 6-12 months, depends on the city and industry
→ Wholly Foreign Owned Enterprise(WFOE)
The Wholly Foreign-Owned Enterprise is any enterprise in China which is 100% owned by a foreign company or companies.
Compared to a Joint Venture, the advantage is that the foreign investment is able to set its own strategies and goals without having to consider a Chinese partner.
The shares are in the hands of foreign investors and the company is founded as a subsidiary in most the times.
WFOEs (or WOFEs) are able to conduct business, issue invoices, protect their intellectual property, and have no special requirements for Import and Export license for its own products.
If you wish to have more information, or if you have chosen to start the set up process for a WFOE in China, contact us. At RoleHR, we have the experience you need to guide your business in its new venture.
For the complete list of documents and the detailed process to apply for RO, JV or WFOEs in China, contact us (hyperlink to our email). We'll be happy to give you all the information you need.
Time to establish: 3-10 months, depends on the city, industry and the investment capital
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