Includes steps involved in establishing a local office.
Last Published: 7/30/2019

Foreign companies have a wide range of options for establishing a presence in China, including as a wholly foreign-owned enterprise, through a joint venture, by opening a representative office, and other investment vehicles.  Each option has its own advantages, disadvantages, and risks.  Firms seeking to establish a presence in China should work with qualified, experienced legal advisors. 

Representative Office

Setting up a representative office (RO) is a mechanism for establishing a presence in China that has no registered capital requirements.  However, an RO’s scope is quite limited: ROs may not engage in any profit-making activities, and can only legally participate in market research, investigation, promotional activities of products or services, liaison for the purposes of selling products or services, domestic procurement, or domestic investment.  Since a RO is a not an independent legal entity in China, their parent company is responsible for signing any sales contracts and must have an established history of more than two years.

Applications for most industry ROs can be directly submitted to the Administration of Industry and Commerce in the locality where the proposed RO is to be established.  The registration of a RO is required to employ Chinese nationals, to open a bank account, and/or to use business cards that identify the company’s presence in China.  ROs may employ no more than four foreign representatives at a time.  ROs are not considered Chinese legal persons, and therefore are limited in hiring ability, issuing invoices, and receiving payments in RMB.

Wholly Foreign-Owned Enterprise

A wholly foreign-owned enterprise (WFOE) is a limited liability company with complete ownership by foreign investors.  A large majority of new foreign investments in China are WFOEs, rather than JVs. As Chinese legal entities, WFOEs experience greater independence than ROs, are allowed exclusive control over carrying out business activities while abiding by Chinese law and are granted intellectual and technological rights. However, the process of establishing a WFOE can be relatively long.  The Chinese government issued a new foreign investment law in March 2019 and plans to issue corresponding implementing guidance, which may impact registration requirements for WFOEs when the new law goes into force in January 2020.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.