Reed Smith Client Alerts

The China market continues to entice new overseas participants as well as new investment from existing foreign investors in China in many sectors, including in the commodities and energy and natural resources sectors. One of the key strategic decisions to be made when contemplating entering the China market is whether or not to do so by establishing a presence onshore. This decision will be determined by a host of factors including the nature and scale of the business, the regulatory regime for the relevant industry sector as well as cost and tax implications.

Auteurs: Katherine Yang

Short of establishing a registered presence in China, many foreign companies conduct business through purely contractual arrangements, such as trading, licensing or distribution agreements, with Chinese counterparties. These arrangements can continue without the foreign party needing to register a presence in China and the business can be developed and serviced through occasional customer or counterparty meetings in China under a business visa.

This short ‘crib sheet’ touches on different options for establishing a basic onshore presence where required or desired.

There are three principal forms of registered presence for foreign investors to conduct business in China: (i) a representative office (“RO”); (ii) a wholly foreign-owned enterprise (“WFOE”); and (iii) a joint venture (“JV”).

To be or not to be in China - Table 1