Shenzhen Futian Company Set-up Service
Hotline: 86-755-82143410, Email:2355725105@qq.com
China Company Type
For foreign enterprises there are three main types of companies in China. Each type has its advantages as well as crucial disadvantages. Before investing in China, each company has to be sure what it wants to reach and how long it wants to stay in the Chinese market.
Representative office (RO)
The formation of a representative office is for many companies the first step to China. In most of the cases these companies already have a customer base in China and want to support them or get accustomed to the new environment. The representatives are founded out of marketing and promotion reasons in most of the times. A sponsor is necessary for the formation of a representative office in China. This has to be a Chinese company. Mostly the company is founded in cooperation with existing customers or business partners. The problem concerning a representative office is that they are not allowed of signing business deals or contracts. They are not allowed to be involved in any business operations as well as selling products in China. For such activities they need a Chinese company or trade office. The initiation and searching of new business contacts, consultation and perhaps the creation of market studies are their main tasks. Another problem is the hiring of Chinese staff. The employees just can be hired through assigned agencies. These agencies recommend the company the employees. The agencies will take care about the payroll accounting and the fringe costs. The formation of a representative office goes easy and fast.
Joint Venture (JV)
In earlier year the Joint Venture was the most common business type for foreign enterprises in China. In some sectors it was and still is necessary for the formation of such a company as a car producer or the aircraft industry. A crucial point for the formation of the JV is to gain market shares, customers and knowledge about the Chinese market through the JV-partner.
Wholly Foreign Owned Enterprise(WFOE)
Nowadays it is the most common type for founding an enterprise as foreign investor. Compared to a JV the advantage is that the foreign company is able to follow their own aims more clearly and does not have to take care about their Chinese JV partner. The shares are in the hands of foreign investors and the company is founded as a subsidiary in most the times.
Normally the WFOE's is Limited Co. A certain rate between the equity capital and the investments is regulated and is according to the sector. Two reports are necessary for the formation of a Ltd. To found a Ltd. You need a project report with the documentation of the project, the aim, etc. as well as a feasibility study. In most of the times both reports can be put together into one document. Next to these reports a good relationship to the government is an advantage. If you follow just the exact rules rather than the Chinese way while founding the company, the formation can take a long time.
Contact Us
If you have further queries, don’t hesitate to contact ATAHK anytime, anywhere by simply visiting ATAHK’s website www.3737580.net , or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143512, or emailing to anitayao@citilinkia.com.