A WFOE in China

A WFOE is a company wholly owned by foreign investor(s). It was designed as a vehicle for foreign investors to carry out commercial activities in China, and is established under the form of a limited liability company, not requiring any local partnerships. This type of vehicle notably allows investors to retain control of their capital and company management.

A sales office

The creation of a sales office is principally for setting up commercial representation, without legal and financial restrictions. Its establishment requires the involvement of 3 different parties:

  • The foreign company, who decides on the characteristics of the sales office, i.e. its architectural properties, location and size;
  • The representative of the foreign company in China;
  • The local partner, called a PEO (Professional Employment Organization).

This option offers simplicity, flexibility and reduced taxation.

A representative office

A foreign company can use a representative office in order to carry out certain operations in China. While the scope of activities for this type of office may be limited, opting for this separate legal entity offers a simple and low-cost solution for operating in China.

A joint venture

A joint venture is a commercial agreement in which at least two parties combine their resources in order to achieve a specific objective. The creation of a joint venture with a Chinese partner allows foreign investors to:

  • Make use of the workforce, facilities, networks, channels and other resources of the local partner;
  • Avoid administrative problems and other bureaucratic complexities;
  • Access certain sectors and industries in China.

Comparison of the different options

WFOE

Set-up time

3 to 6 months

Commercial activity

Direct

Administrative tasks

High

Hiring capacity

Medium

Cost breakdown

Business + Office + Staff
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SALES OFFICE

Set-up time

0 to 1 month

Commercial activity

Local partner

Administrative tasks

Weak

Hiring capacity

High

Cost breakdown

Office + Staff
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REP. OFFICE

Set-up time

2 to 6 months

Commercial activity

Local partner

Administrative tasks

High

Hiring capacity

Medium

Cost breakdown

Enterprise + Office + Staff
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JOINT VENTURE

Set-up time

3 to 12 months

Commercial activity

Direct

Administrative tasks

High

Hiring capacity

High

Cost breakdown

Enterprise + Office + Staff
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With our twelve years of on-the-ground experience in China, we are opening the doors to entrepreneurs aspiring to thrive in Asia. Faced with the difficulties that can occur when launching a business, we offer the structure most adapted to your project and help you get it up and running efficiently.

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