There are many different corporate structures in China and the following will provide some useful information of the corporate structures, hope to help people who want to do business in China.

 

A WOFE is a business entity formed in China entirely with foreign capital. This type of China Company formation is totally under foreign control, with no formal Chinese ownership participation. For a foreign company to be able to issue receipts and export goods from China, it must be legally registered as either a local company or a WOFE. A WOFE is set up as limited liability entity, represents separate legal persons and is taxed according to local legislation. WOFEs can generally control their own governance through the articles of association and the normal minimum paid up share capital starts from 1 million RMB (approximately US$140,000). However, some provinces offer lower capital requirements in order to attract more foreign investment. Many foreign investors find this type of China Company formation attractive because of the full control and 100% ownership.

 

A FICE is the most recent corporate structure available in China. A FICE is much like a WOFE, except there are fewer restrictions. The geographical restriction placed on a WOFE company does not apply to a FICE. However, a FICE is not applicable to companies engaged in manufacturing.

 

Minimum paid up share capital for a FICE is RMB300, 000 (approximately US$37,500) or RMB500, 000 (approximately US$62,500), depending on what your business is. However, in some locations, it may be advisable to have higher capital in order to prevent delays in processing your application.

Just like a WOFE, a FICE is set up as a limited liability entity, represents separate legal persons and is taxed according to local legislation. This type of China Company formation is attractive to foreign investors because of the full control and 100% ownership.

 

In a JVC, a foreign person or entity goes into business with a Chinese person or entity. This type of China Company formation is usually set up as a limited liability company, with liability limited to the contribution of the shareholders. There is no minimum foreign contribution requirement for a JVC, allowing for foreign minority shareholders. Contribution is not required to be monetary, as it can also be ‘in kind’, including labour, resources and services. You can negotiate whatever suits your needs, but it is important not to rush this process and include every detail to ensure the company runs smoothly later.

 

A Representative Office is a useful and inexpensive corporate vehicle through which a foreign presence can be established. However, ROs are restricted in their activities. They can be valuable in I) market research ii) marketing and sales administration iii) project investigation for parent company and IV) hiring of local staff. ROs cannot invoice Chinese clients and premises must be rented in China. Still, ROs can be important in the introduction of your company to China.