China Company Registration
Start a company in China can be thrilling and confusing at the same time. You may find it overwhelming when you are unfamiliar with Chinese legislation and the requirements of different authorities.
Let's start digesting the subject from the common types of business presences in China. Generally, you have five options available:
1. Wholly Foreign Owned Enterprise (WFOE): a limited liability company wholly owned by one or multiple foreign investors. Its liability is limited to its registered capital. This vehicle can generate income, pay tax in China and repatriate profit to home country.
2. Foreign Invested Partnership Enterprise (FIPE): A partnership enterprise established between foreign enterprise(s) and individual(s), or between foreign enterprise(s) or individual(s) and Chinese individual. No registered capital requirements. A FIPE can generate revenue, hire employee and enter contractual relationship with local Chinese companies.
3. Representative Office (RO): a liaison office of its parent company. No registered capital requirements. It cannot carry out any activity that generates revenue, nor can it enter into contractual relationship with a local Chinese company. Its legally permissible activities include: product/service promotion, market research and quality control.
4. Joint Venture (JV): a limited liability company formed between a local and a foreign investor. A JV is usually established when the foreign party intends to enter restricted industries, such as automotive, education, medicals and finances. Forming a JV often involves risks in technology transfer and trademark/copyright protection.
5. Hong Kong Company: a Special Purpose vehicle (SPV) in investing in mainland China. It is often chosen by European and North American companies to quickly establish a business, even though a HK company is not a legal entity in mainland China.