china wofe

You will find only three paths for foreign investors to begin working in China. The choices are simple; you are able to open an agent office, a wholly owned foreign enterprise or you are able to run a joint venture with an area partner. Here's a brief guide to each and their pros and cons.

Representative Office

A representative office requires an established overseas entity that ought to have already been trading for at least two years (though this is often circumvented by buying an "aged" off the shelf company). Occasionally this requirement is ignored by the licensing authorities but you will find no guarantees of this. wofe in china

The representative office is allowed to determine an identity in China and to conduct negotiations with local businesses and pay invoices. It's banned to sell products in China or to hire and fire staff (any staff you will need will soon be selected by the neighborhood authority and will be more expensive than if you might hire direct).

Pros: In principle it is a quick solution to start a business, it allows you to conduct business in China legally

Cons: Used it's expensive, you lack control over your workforce, and you can't sell anything locally

Wholly Owned Foreign Enterprise (WoFE)

We're told by Chinese lawyers that this method is almost always chosen over an agent office in practice. A WoFE lets you run your personal business in China with total control over practices such as for instance hiring and firing and where you are able to establish your working environment etc.

Due to the level of control granted to the owners many expatriates swear blind that this is actually the only or simplest way to do business in China. However it's worth being aware there are certain sectors in which WoFE's may possibly not be create and others where the competitive nature of your organization might be severely damaged by being wholly foreign owned.

Pros: Used it's cheaper to setup than the usual representative office, it offers you complete control over your organization, you are able to hire and fire staff, creating a WoFE is uncomplicated if a little time consuming

Cons: Lacks use of certain sectors, cannot qualify for state grants or subsidies which can be commercially damaging specially if your organization is in a "five year plan" focus area

Joint Ventures

A Joint Venture is just a commercial entity that is jointly owned and managed with a Chinese investor and a foreign one. There's been an enormous level of media attention given to the difficulties faced by early investors in the united kingdom when starting a joint venture. china wofe

Certainly it's not the easy option for conducting trade in China however joint ventures offer enormous opportunities for those ready to overcome the cultural hurdles, they qualify for subsidies in priority sectors and are well regarded by the state which might make certain barriers to business better to overcome.

Pros: Qualify for subsidies, better to overcome bureaucracy, will definitely have better connections for working inside of China

Cons: Can be quite a nightmare of culture clashes, partners need to be chosen carefully or you are able to get two organisations under one roof, require a high-level of co-operation and communication to be successful

The very best place to begin if you're looking to setup in China is by conversing with an area lawyer who will walk you through the options and the expense and offer you an insight into local regulations and policies which might influence your decision.