For all of us (foreign) 'locals' in Shanghai, we have seen the enormous growth in foreign owned restaurants over the past few years. Not only are such establishments well-liked (and very money-making), they are adding up to the international cuisine as well as outlook of the nation's metropolises.
In order to set up a restaurant, the proprietor must decide what kind of entity would own and operate the organization. In China, this is much trickier than in other markets such as the US, where people can own as well as operate businesses. Luckily, the restaurant business is quite open and the functioning entity might be either a Wholly Foreign Owned Enterprise (WFOE Shanghai) (owned by a business or individual) or a Joint Venture (JV) (if partner with a Chinese national), although it is not promising for a foreigner to have possession of the restaurant trade directly as a single proprietorship. Further, to open up a restaurant, there are supplementary licenses along with approvals that are essential in addition to the conventional requirements of a partial liability company. On the other hand, once the corporation is set up with the appropriate business scope as well as registered capital, it can be used to open up additional branches, though; obviously, each branch would require certain approvals for that definite location.
Unless there are convincing reasons or else, such as locating and trusting a appropriate Chinese partner, the WFOE, a restricted liability company wholly owned by the financier, is the probable choice for foreigners, as it presents the most sovereignty. Although, formerly quite common and regrettably still widespread, for the sake of effortlessness, many foreigners choose to allow Chinese partners to open up the restaurant as a domestic (Chinese) business. In this case, the Chinese partners will be the one and only shareholders of the corporation, leaving the overseas investor with no legal possession rights.
