To jv or not to jv that is the question over the past 17 years that i have been advising clients in both hong kong and shanghai on market entry to china, the question is often raised, should they enter the market in the form of a joint venture with a chinese partner or take the path of establishing a wholly foreign owned enterprise. Owned enterprise (wfoe) or wholly owned foreign enterprise (wofe) allows the foreign investor to maintain complete ownership of the business enterprise and to operate the business without the constraints of a local partner that may not share the same goals, expectations, values, or firm culture. The foremost consideration when setting up a business in china is the type of structure there are two main forms of incorporating a business in the country: joint venture (jv) and wholly foreign enterprise (wfoe).
How to check the registration of your jv / wfoe / ro in china by matt slater october 30, 2013 foreign companies wishing to do business in china do not necessarily need to establish any kind of organisation in china. We have been recently advising a european client who has been in complex negotiations with a deep-pocketed chinese company on forming their joint venture (jv) company in shenzhen, china. Nature of a wholly foreign-owned enterprise (wfoe) although at one time it was normal for foreigners wishing to do business in china to use either a representative office or to form a joint venture, these forms have their disadvantages, and it has now become common practice to form a limited company under the law of the people's republic of china on enterprises operated exclusively with .
Side note: since china still maintains foreign currency control policy, it’s still advisable to choose registered capital within rmb 100,000 ~ rmb 500,000 as the minimum registered capital for a consulting wfoe, service wfoe, or hi-tech wfoe registration in shanghai, beijing, shenzhen, tianjin, guangzhou, hangzhou, ningbo, suzhou, chengdu, chongqing, wuhan, xi’an and many other cities of china. Consider the following before entering a jv: joint ventures are extremely difficult to setup, properly manage effectively and to maintain agreement between the partners on the goals of the company many if not most jv’s in china end in failure understanding the value and motivations behind the establishment of the jv is critical to success. One of the biggest choices when a foreign company is thinking to open a new business in china is the basic nature of the company in china a company can be incorporated as wfoe (whole foreign owned enterprise) or jv (joint venture). Although china’s entry to the world trade organization seems to favor the establishment of wfoe’s, and even as foreign companies acquire more practical experience in china they are increasingly likely to “go it alone,” some instances still favor the formation of a jv.
Wholly foreign owned enterprise (wfoe) a wholly foreign owned enterprise is a limited liability company formed in mainland china entirely with foreign capital it is totally under foreign control and does not have any formal chinese ownership participation. In all of china’s big ticket investment area, and certainly its restricted industry sectors, having a jv partner is mandatory there are a number of reasons for this, related mainly to political and strategic sensitivities over certain industrial sectors over which china either wants to maintain control or to keep a close eye on. Zanya international consulting limited is a professional company registration firm in china,with offices in guangzhou and hong kong with eight years development, we have already established a high efficient biz consulting team and a stan.
This ultimate guide for china wfoe formation in 2018 is designed to resolve any doubts you may have in setting up your business in china china wofe is the type of company foreign friends are most eager to know before they set sail their business in china, whether you are in guangzhou, shenzhen, foshan, shanghai, yiwu or any other city in china. The wholly foreign owned enterprise (wfoe) is a limited liability company wholly owned by the foreign investor(s) in china, wfoe s were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology. Previously, there are close to 50 regulators in china with the power of granting a wfoe licence but before aberdeen, none of the wfoe licences granted to other foreign managers involved actual securities advisory activities or secondary market trading. The wholly foreign owned enterprise (wfoe or wofe) is a limited liability company wholly owned by the foreign investor(s) in china, wfoes were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology.
Concept of representative office representative office (ro) is established by foreign companies and act as a liaison office a ro is not considered to be a separate legal entity, is not allowed to directly engage in business activitie. Essentially, a wfoe is being set up as a joint venture with a chinese company, so the tax structure on the jv is the same as the wfoe representative office what is it a representative office (ro) is a legal entity that represents a foreign company in china. Doing business in china as a wfoe, a jv or a representative office. Doing business in china, forms of incorporation by china unique (wfoe or wofe) joint venture(jv), which can be established in a variety of ways joint venture .
Wholly foreign owned enterprise (wfoe) is a limited liability company that is wholly owned by one or more foreign investors it is a preferred investment vehicle among foreign investors intending to set up a manufacturing or processing business in mainland china. For some industries, foreign investment is only allowed via joint venture 2 determine if the foreign investor is an approved investor in theory, any legally formed foreign business entity is authorized to invest in a wfoe in china.
Foreign asset managers with china plans may find that establishing a wholly foreign-owned enterprise (wfoe) is better than having a joint venture #china #wfoe. For some businesses, the recently curated structure of wholly foreign-owned enterprises (“wfoe”) may be the best choice, and for others, simply forming a representative office may be the ideal choice today, newly-formed wfoe’s outnumber new jv’s in china. 2 sino-foreign co-operative joint venture and 3 wholly foreign-owned enterprise (individually a fie, and collectively fie’s) it is only intended as a general introduction to foreign investment enterprises, and should not be relied on in substitution for specific legal advice.