Company Registration in ChinaThere are three main types of business entity that allow foreign companies to establish a presence in China.
- Representative Office (RO) – an independent legal entity in China. A nominated Chief Representative is required as part of the registration process and this person becomes the legal representative in China for your company. An RO is liable to business tax based on its expenditure in China.
- Joint Venture (JV) – a partnership between foreign and Chinese investors that shares profit, loss and management. In some industrial sectors, the Chinese regulations only allow foreign companies to enter with a Chinese partner. Most of the JVs in China are Equity Joint Ventures (EJVs), though some investors establish Cooperative (or contractual) Joint Ventures (CJVs).
- Wholly Owned Foreign Enterprise (WOFE). The unique feature of a WOFE is that the involvement of a mainland Chinese investor is not required. This kind of enterprise does not automatically have the right to distribute its products in mainland China. A recent variant on the WOFE model, a Foreign Invested Commercial Enterprise (FICE), does have the right to do this.
XYZ Communications advises its clients on the advantages and disadvantages of each model in terms of set-up cost, restrictions on business practice, management risk and tax.Examples of recent projects include:
- Analysis and recommendation for a UK food company looking to set up a presence in Shanghai.
- Interpreting regulations and assisting a UK automotive company to register their WOFE in Wuxi.