Establishing a Legal Entity
When a foreign investor chooses to enter the China market, they will first need to decide whether to launch their business by establishing a legal entity with a capital investment in China or to start more cautiously by testing the market, building networks and/or hiring local representatives.
Sovereign China has extensive experience with the entire spectrum of business entities in China, from Representative Offices to more complex Foreign Invested Enterprises such as Wholly Foreign Owned Enterprises (WFOEs) and Joint Ventures (JVs). We have worked with hundreds of clients in virtually every industry sector including: Logistics, Trading and Distribution, ICT-Internet, Automotive, Aerospace and Marine, Industrial and Manufacturing and Financial Services.
Our consultants have developed an extensive network of local connections to expedite business registration projects and to negotiate for favourable incentives for large Foreign Direct Investment (FDI) projects.
Registering a foreign company in China is complex because it involves approval from multiple local authorities and bureaux. Our extensive network of local government bureaux contacts, knowledge of local regulations and the experience gained from hundreds of Previous projects can help you accelerate your entry and growth in China.
Key corporate formation services include:
- Investment planning
- Location search and selection
- Company registration (WFOE, FICE, JV’s and RO’s)
- Special licence applications
- HR, financial and business environment advisory
- Regulatory compliance
- Government relations building
- Preferential policies negotiation
Send us your inquiry at China@Sovereigngroup.com
Wholly Foreign Owned Enterprise (WFOE)
The most popular entity for doing business in China is the Wholly Foreign Owned Enterprise (WFOE), which is a company established in China according to Chinese laws and wholly owned by one or more foreign investors. A WFOE is a Limited Liability Company (LLC) that can:
• Conduct business activities and generate revenue based upon a limited business scope.
• Hire local employees directly and, in many cases, has no limit for the number of foreign employees.
China Joint Venture (JV)
There are two types of joint venture structure in the China market:
- Equity Joint Venture (EJV) – EJVs have capital investments from both local andforeign firms. The percentage of the capital investment determines the amount of profit and risk that both the foreign and local company assumes.
- Cooperative Joint Venture (CJV) – CJVs are also partnerships with a local company; however, the amount of risk and profit shared by each party is not determined by capital investment but is agreed upon at the beginning of the partnership.
Representative Office (RO)
A Representative Office (RO) can represent the interests of a foreign investor by acting as a liaison office for the parent company but has decreased inpopularity due to its many restrictions. ROs are permitted to conduct market research and to develop partnerships and business channels, but all business transactions, including the issuance of invoices, must be managed by the parent company. An RO is taxed on its expenses and cannot generate revenues.