Incorporating a Business in China
The Chinese Central Government offers four basic incorporation structures for foreign investors that are tailored to fit a wide range of business needs. Local authorities have different tax policies and regulation processes for each structure, so the benefits of each incorporation structure are reliant upon location and intended scope of business. The four structures include:
- Wholly Foreign Owned Enterprise (WFOE)
- Joint Venture (JV)
- Representative Office (Rep Office)
- Partnership Enterprise
Pros |
WFOE |
JV |
Rep Office |
PE |
| Control Intellectual Property | x | |||
| No licensing required for import/export of products | x | |||
| Capability to convert currency USD for repatriation | x | x | ||
| Can purchase/build property in China | x | x | ||
| Can hire staff directly | x | |||
| No minimum capital requirement | x | x | ||
| Less taxation | x | x | ||
| Fast incorporation process | x | |||
Cons |
WFOE |
JV |
Rep Office |
PE |
| Requires large amounts of registered capital | x | |||
| Non-legal entity | x | |||
| Subject to all applicable Chinese business taxes | x | |||
| Harder to protect intellectual property | x | |||
| Cannot directly conduct profit making activity | x | |||
| Cannot invoice or bill clients directly | x | |||
| Cannot hire native Chinese empolyees directly | x | |||
| Must be located in government mandated buildings/ Cannot purchase property | x | |||
| Limited to four employees | x | |||
| Must be established for at least 2 years in home country | x | |||
| Unlimited liability | x | |||
| No bankruptcy protection | x |
Please note: Hong Kong and Macau are Special Administrative Regions (SARs) and follow different incorporating laws than mainland China. For more information on starting a Hong Kong company or a Macau company, please click here.
TriVista’s global consulting team provides guidance to foreign businesses operating in China. Learn More.