One of the biggest choices when an overseas company is
thinking about opening a new business in China is the fundamental nature of the
company. In China a corporation can be incorporated as WFOE (Whole Foreign
Owned Enterprise)
What is WFOE Shanghai
Starting up as a WFOE is certainly very difficult. The
foreign company in this scenario has no Chinese colleague and move towards the marketplace
alone. For sure start up costs in this instance are much higher. Usually, this selection
means also to wish a professional that would take care of all the bureaucratic
tasks to setup an organization and it could hide some long times because to the
fact that trade in China is a local affair, so first idea is to choose a expert
that knows explicitly the peculiarities of the region where you decided to spend
and knows key individuals in the local institutions. After the actual start up,
however problems approach immediately, because unless you have an advance
product or service for China, usually the biggest start up problem for WFOE Shanghai is that they have striking
companies, good technologies, but no marketplace. It's terribly complex for a
WFOE to generate the market for their merchandise, particularly when there're
already local competitors. Occasionally even with Chinese local advertising or
sales team (or existent agent offices or trading companies) could take years to
have a brand name in Chinese market. Sometimes the cultural barriers are so huge
that is actually a learning process pretty long to be aware of how to build the
market without running a lot of risks. So where are the benefits? On the other
side with a WFOE the overseas investor is actually the owner of the business
and could really take decisions on their own, so there's a lot of suppleness in
managing the commerce, choices are quick and appropriate and for sure this in
the long term is a pretty huge advantage principally in the customer
relationship.
