Starting Business in China - A Huge Market

To start business in China, there are few issues need to be consider also, please look at the legal and management issues involved in establishing a business entity in China.

Starting a Business in China
by SME & Entrepreneurship Malaysia

Wolly Owned Foreign Enterprise (WOFE)
In certain industries, the Chinese goverment allows business to be wholly foreign owned. These are usually capital intensive or technology-driven companies and enjoy additional benefits offered by either the central, provincial or municipal goverment. Due diligence should be conducted to ensure that incentives offered to attract your investment are state level approved. Regrettably there has been an increasing number of problems with foreign investment due to local goverment over exaggerations resulting in post-registration non-compliance issues that can have serious consequences. WOFE however, when properly structured, are particularly useful when considering a to open a manufacturing facility in China. WOFE are typically used as China manufacturing investment vehicles, either to manufacture and sell in China, manufacture and sell overseas, or increasingly, a combination of both.


Foreign Invested Commercial Enterprises (FICE)
FICE are commonly used as investment vehicles for international businesses wishing to establish wholly foreign owned operations in international trading, domestic trade, retail and wholesales, and distribution and franchising. FICE however need attention to detail in their structuring, as being considered as services companies in China, they may not obtain China tax holidays. This means tax planning at the pre-incorporation stage must be part of the investment structuring process.

Representative Office
Representative Offices based in China are relatively inexpensive to establish, and do not require capitalization. Typically, they are used for China market research activities, to access the scope and depth of the domestic market when considering a future investment, or for liaison activities between China-based buyers of the services or products sold by your international business. China representative offices cannot invoice directly however, meaning the payment terms must be arranged directly between the international businesses parent company overseas, and the China-based purchaser. There can be tax considerations here so be careful to examine this aspect.

Joint Ventures
Joint ventures with a Chinese partner can be considered as an investment strategy into China if the specific industry you are engaged in is restricted with only partial foreign investment permitted, or if the China partner can provide some tangibles, such as supply chain, a complimentary existing customer base, or other distribution channels of use to your product.