No doubt China is a lucrative market for foreign investors and startup companies. However, foreigners have limited options when it comes to forming a legal entity in China. After complying with lengthy documentation process, fulfilling legal requirements and running company registration check, you can enter the Chinese market.
Wholly Foreign Owned Enterprise (WFOE)
To own physical assets and hire human capital within China, WOFE is the best option for you. There are three types of WFOEs—manufacturing, consulting and trading.
The setup cost and WFOE requirement will differ for each sector. However, establishing a WFOE requires registered capital of around RMB 100,000 ~ RMB 500,000.
Although setting up a WFOE is an extensive process, it provides more control over business operations, tax subsidies, access to large talent pool, and ability to transfer money to the parent company.
Hong Kong Company
Setting up a company in Hong Kong is relatively easier than other investment options. Hong Kong has a sound legal framework and corporate law structure that facilitates foreign investment. One of the benefits of setting up a limited company in HK is zero tax policy.
HK treats foreign companies as offshore entities and does not tax them. However, foreign companies are subjected to annual audits conducted by a certified HK Audit Firm, and are required to maintain accurate financial accounts.
Joint Venture
For local support and information and technology sharing, joint venture is an ideal option.
Joint venture is a commonly used Foreign Invented Enterprise. It provides access to restricted sectors and offers considerably easier setup process. Develop a comprehensive partnership contract stating capital and profit sharing guidelines. Most importantly, verify the Chinese business registration number to ensure that you’re dealing with a legitimate business.
Representative Office (RO)
This business entity has multiple restrictions; however, it’s the easiest form of business representation in China. Representative office can’t receive payments from corporate clients, on behalf of the parent company. And it needs to transfer money from abroad to pay daily expenditure.
Even though a representative office has no source of profit, the Chinese government still required ROs to pay taxes.
Before venturing into new country, learn about local trends, consumer behavior, corporate culture and regulations, business dynamics and other pertinent information regarding operating a business. Conduct market research and develop a comprehensive business plan.
Email us your business plan and we’ll get back to you with a simple, yet strategic plan to enter the Chinese market. Business China can simplify and streamline the registration process for you. We are well-connected with the local and state authority, which allows us to provide a speedy and hassle-free registration process to our clients.
Our English-proficient consultants will aid you throughout the registration process, cross all the red tape and make sure that the entire process is convenient.
Along with helping in the registration and incorporation of WFOE, joint ventures and partnerships, we also offer premium accounting and company management services.
Call +86-020-2917 9715 to know more about our services.
