There is no surprise in this fact that every country has their own rules and norms for setting up business. And when it comes to investing in the Chinese market, there are most difficult rules and regulations for the foreign investors. So when you have finally decided to set up a business in China, there are some of the common options that you need to choose while doing business in China.
China is the fastest growing country but investing in the chinese market is quite complicated if you are aware of basic rules and regulations. As you are new to the Chinese market, you may not know that there are lots of options available in China for setting up the business. Here's the list of the few common company structures you can use in China and able to identify what are the pros and cons of each.
1. A Wholly Owned Foreign Enterprise (WFOE Shanghai)
This type of business structure is best for those investors who want 100% invested ownership over the subsidiary in China. The biggest benefit of WFOE Shanghai is that that, shareholders and investors have complete ownership in a Chinese market. This will gives you the freedom of operation and full business functionality on par with domestic companies. The only drawback of this ownership is that they this can take generally longer to set up and has a higher fixed cost.
2. Joint Venture (JV)
When you do not afford to invest in Chinese markets solely, then the best ownership option for you is Joint Venture. A Joint Venture ownership enables to get collaborated with a domestic company in China and completely share all the company expenses, profits, and liabilities of that company. Every ownership has their own benefits and limitations, so Joint Venture can allow you access to the network of a local partner and reduce the complexity of the business setup
3. Representative Office (RO)
If you are one of those who want to set up a business without following any complicated procedure, then RO is the one that follows most simple and straightforward structure for opening a business in China. The only disadvantage of setting up a representative business is that it can impose a heavy tax burden on expenses.
1. A Wholly Owned Foreign Enterprise (WFOE Shanghai)
This type of business structure is best for those investors who want 100% invested ownership over the subsidiary in China. The biggest benefit of WFOE Shanghai is that that, shareholders and investors have complete ownership in a Chinese market. This will gives you the freedom of operation and full business functionality on par with domestic companies. The only drawback of this ownership is that they this can take generally longer to set up and has a higher fixed cost.
2. Joint Venture (JV)
When you do not afford to invest in Chinese markets solely, then the best ownership option for you is Joint Venture. A Joint Venture ownership enables to get collaborated with a domestic company in China and completely share all the company expenses, profits, and liabilities of that company. Every ownership has their own benefits and limitations, so Joint Venture can allow you access to the network of a local partner and reduce the complexity of the business setup
3. Representative Office (RO)
If you are one of those who want to set up a business without following any complicated procedure, then RO is the one that follows most simple and straightforward structure for opening a business in China. The only disadvantage of setting up a representative business is that it can impose a heavy tax burden on expenses.
