It is of the utmost importance for new entrants to the China market to be fully apprised of all critical factors that have a significant effect on the success of their business operations in this new setting. We assisted many new entrants to the China market with market entry research, business intelligence, and strategic business advice on the market they required, to make timely and informed decisions.
A new entrant should execute due diligence, for example, to verify the existence of a factory or its ownership by people who allege they own it, vetting of employees to ensure that the company is employing whom it thinks it is employing, on landlords, suppliers, distributors, and so forth. The objective is to address market entry risks by exercising care and foresight, and avoid exposure to unexpected problems after entry. We help clients navigate the unfamiliar terrain as we have excellent understanding of the operating environment and the experience, knowledge and insights to anticipate potential risks.
We offer clients a wide range of services to support and facilitate their entry to the China market. Our due diligence investigations provide reliable and accurate business intelligence on the market, its operating environment and the competition. We perform wide-ranging searches together with comprehensive background screening to assist clients in identifying suitable domestic companies for acquisition, merger, or joint ventures.
We help clients determine the most appropriate location for setting up business, taking into account all decisive factors including logistical support. We liaise with the appropriate regional governments and relevant authorities to ascertain the most suited and favorable area for the business.
We work with companies entering the China market to resolve and set up the optimal structure for their operations from 3 options:
- Wholly Foreign Owned Enterprises (WFOE)
- Joint Ventures (JV), and
- Representative Offices (RO).
WHOLLY FOREIGN OWNED ENTERPRISE (WFOE)
WFOEs are the most ideal corporate structure for foreign companies doing business in China. WFOEs are limited liability corporations capitalized with foreign funds. Shareholder liability is limited to their original capitalized investment.
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, being limited to performing "liaison" activities. ROs cannot sign contracts or receive funds in China.
This structure is best for companies seeking a soft entry into the China market, 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 Joint Venture (EJV) or a 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 invest at least 25%.
Cooperative JVs pre-determine management and profit sharing through a contract negotiated before the establishment of the JV.
For a successful China market entry, A. Louie works to negotiate an effective and enforceable JV partnership that takes into account realistic business expectations.