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SERVICES  //  PRE IPO  //  Formation

Formation

PERSONAL ASSESSMENT
China is the largest and fastest growing market in the world. When you first decide to form a business in China, your concerns are probably required capital investment, formation and operating costs, company tax liabilities and deductions, total income tax and so on. But seriously, put some thought into this; what you really need is a personal assessment:
• Can you operate a localized multilingual business according to mainland or Hong Kong China laws and regulations?
• What are the differences between Representative Office (RO), Wholly Foreign Owned Enterprise (WFOE) and Joint Venture (JV)?

That's just the tip of the iceberg. These additional challenges are even more important:
• What about tax deductions, interest payments, property acquisitions or charitable donations?
• Should you form an international trade (import/export) firm in mainland or Hong Kong China?
• What about elderly residential care, home loan, fund and retirement scheme contributions?
• How do you assess first-year business losses and bring forward previous years losses?
• Do you need independence, legitimacy, issue invoices in RMB or protect your intellectual property?
• Will you need more than four staff?

 

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REPRESENTATIVE OFFICE (RO)

When you decide to enter the Chinese market, you can work through an agent, distributor or form your Representative Office (RO). Whereas an agent or distributor may show limited loyalty and customer satisfaction interest, your RO can achieve quality control very effectively.

An RO is the easiest foreign investment structure to form. Unlike a Wholly Foreign Owned Enterprise (WFOE), the RO requires no registered capital. However, the RO should only engage in activities that relate to your products or services:
• Market, Customer and Consumer research
• Marketing, Promotion and Display activities
• Business Networking activities

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WHOLLY FOREIGN-OWNED ENTERPRISE (WFOE)

When you decide to operate for profit, you need to consider forming a Wholly Foreign Owned Enterprise (WFOE) in China. Here are the reasons why you need help forming and operating your WFOE.

Your benefits compared to Joint Ventures, and Representative Offices (RO) are independence and legitimacy:
• Operate for profit according to Chinese laws (an RO can't)
• Issue invoices in RMB to local customers
• Obtain tax deductions
• Protect intellectual properties better
• Employ more than four local staff
• Not obliged to recruit from employment agencies

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JOINT VENTURE

If you need a local partner, then you likely need to form a Joint Venture (JV) in China. Here are some reasons why you need assistance.

Your benefits compared to Wholly Foreign Owned Enterprise (WFOE), and Representative Offices (RO) are independence and legitimacy:
• Help in selecting joint venture partners in China
• Laws and regulations governing foreign direct investment in China
• Investment project feasibility studies
• Contractual joint venture projects and equity negotiation assistance
• Preparation of complete sets of investment documents
• Representing you in business partnership communication and coordination
• Governmental authorities representation
• Equity and share transactions, mergers and acquisitions and split transactions, liquidations, dissolution and winding-up.
• Intellectual property protection

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