Each jurisdiction in China has different rules and regulations. There is no way for you to know this unless you have daily contact with local government officials. We do. We maintain long term relationships with Chinese Officials and are your boots on the ground. We get your business up and running quickly and efficiently. The most common types of foreign entities that register in China are: Representative Offices, Foreign Invested Commercial Enterprises (FICE), Wholly Owned Foreign Enterprises (WOFE), and Joint Ventures (JV).
This type of entity allows for liaison work only. This entity is not allowed to conduct buy/sell transactions, but many companies use this structure for marketing/promotion of products and services offered in their home countries. Some use a rep office to staff up and explore opportunities before making an initial investment. Many companies establish a rep office for quality control, sourcing activities or for monitoring production.
This type of entity allows for doing local business, including local invoicing in the RMB. The entity is allowed to conduct import/export and to be registered directly with China customs. The required initial investment is 100,000-500,000 RMB (about 16,000-80,000 USD). Types of WFOE include manufacturers, consulting companies, technology companies, food & beverage import/export, trade and wholesale/retail outlets.
Advantages of a WFOE: control of hiring, firing, investments and strategy; no need for Chinese Party approval; ability to issue invoices in RMB; can repatriate profits and protect intellectual property. A WFOE is suitable for new ventures and allows for long term licensing.
An FICE is a variant of the WFOE. An FICE is used mainly for trading enterprises (buying and selling). The capital requirements are lower and there is no required investment in equipment or facilities.
This type of entity is a partnership with a local Chinese company. The required investment capital is RMB100,000 – RMB500,000 (16,000-80,000 USD). This can be beneficial where local knowledge is required or where the partner has critical contacts and can assist with market penetration. Additionally some categories of business are legally limited to the Joint Venture structure in order to do business in China.