Market Entry
CHINA CORPORATE STRUCTURES
The PRC demands that companies wishing to engage in business operations must establish a corporate structure. Companies can choose from three main corporate structures when entering the China market: Wholly Foreign Owned Enterprises (WFOE), Joint Ventures (JV), and Representative Offices (RO). A. Louie works with companies entering the China market to identify and set up the optimal structure for their operations. Furthermore, we work with the relevant regional governments to determine the best local jurisdiction within China on behalf of our clients.
Wholly Foreign Owned Enterprise ("WFOE")
WFOE's are the most ideal corporate structure for foreign companies conducting business in China. WFOEs are limited liability corporations capitalized with foreign funds. Shareholder liability is limited to their original capitalized investment. A WFOE…what next?
Representative Office (RO)
RO incorporation is the most rapid mode of deployment in the Chinese market. ROs are also the most economical corporate structure. ROs are comparatively inflexible; limited to performing "liaison" activities. ROs cannot sign contracts or receive funds in the PRC. The RO structure is best for companies seeking a soft entry into China, and do not wish to accept RMB.
Joint Venture ("JV")
JVs are a partnership between a PRC and non-PRC individual. JVs are generally categorized as either an Equity ("EJV") or Cooperative Joint Venture ("CJV"). EJVs are subject to limited liability for each partner in proportion to the investment contributed. In most cases, foreign investors must offer an investment of at least 25%. Cooperative JVs pre-determine management and profit sharing through a contract negotiated before the establishment of the JV. A. Louie works to negotiate an effective and enforceable JV partnership that takes into account realistic business expectations.