One of the most vital decisions you must make is what type of company to register. There are three types of business registration China to choose from: a Wholly Owned Foreign Enterprise (WOFE), Joint Venture (JV), or a Representative Office (RO). Let’s take a look at each one in further detail. A WOFE enables foreign entrepreneurs to own 100% of their Chinese entity. This means that you do not need a Chinese partner.
WOFE company registration China has become more popular recently, as it gives foreign investors more control. However, this type of business is typically a bit more complicated to set up, which is why you need a professional firm to assist. The next option to consider when it comes to how to register a business in China is a Joint Venture. With a joint venture, you will need to have a Chinese partner. While you will get their expert assistance and connections, there are risks associated with someone else having a controlling share of your business. If the partnership deteriorates, you could lose control of your business and brand.
Finally, you have the option of a representative office. This is much easier to open than the other two forms of business, but it is very limiting in terms of what the company can do. For example, you cannot accept payments from Chinese clients, nor can you import or export, and you cannot manufacture products either. This option is usually only suitable for offices that do not do direct business, for example, and office for your customer support staff. You can also go for a virtual office address if you want to have an address in China but not actually set up a company there.
Do You Need To Find A Chinese Partner?
One thing a lot of entrepreneurs are concerned about is finding a Chinese partner. Under certain business models, for example, a Joint Venture, you will need to have a Chinese partner. However, if you can set up your company as a WFOE, you can do it alone, meaning no local connections are required. If you require a local partner, it will typically be an established businessperson or Chinese-owned company that can navigate the complex regulations and legal processes, and has good contacts in China.
The partner you choose when starting a business in China should also deal with the government directly. A good type of partner to go for is an incorporated business that is roughly the same size as your company. They should also be well connected in the Chinese market, and is at least partly Chinese-owned. It is wise to avoid partnering with massive state-owned enterprises when starting a company in China, as they will leverage out your firm every time. But, you still need a partner that has the network needed to get things done.