Doing Business in China For Dummies®

Choosing the Right Business Structure

Setting up shop in China unfortunately isn’t as easy as incorporating a company and opening your doors. You have two overall choices:

✓	Representative office
✓	Foreign-invested enterprise (FIE), operated as either A joint venture (JV) A wholly foreign-owned enterprise (WFOE)

Whether you should set up a rep office or an FIE partially depends on whether your company will be collecting money in China. Sending money offshore can be challenging. When you receive money from customers inside of China, getting it out is harder than what you’re probably used to. Your customers may have a hard time sending money to your foreign bank account, too! (To understand these issues better, read this chapter closely with Chapter 10.)

If you need to collect money from businesses or others inside of China, select one of the FIE options. If not, opt for the representative office, which is an easier entity to establish.

Representative offices

A representative office (rep office) is technically not a company in China; it’s considered an extension of your offshore company. The representative office isn’t directly doing business in China — rather, it’s doing indirect business such as consulting, sourcing, support, and liaison activities. To set up a rep office, you need to already have a company set up in another country (offshore).

The main advantage of a representative ...