Company formation in China - An Overview

China has emerged to be one of the most profitable investment centers in the world today. Starting a company in China is certainly a challenging task. It basically has three recognized forms of business organizations under which foreign investors can incorporate their companies; these are Wholly-Owned Enterprise, Joint Ventures and Representative Offices.

The most easiest and effective way to commence a business in China is to start with a representative office. The cost of incorporating this entirely depends on the city and province of registration. However, the foreign company planning to start a business in China must be in operation for at least 2 years. The company has to be financially strong and can appoint 4 foreign representatives including the operating manager to control the working of the company.

A wholly owned foreign company has absolute foreign investment and it is incorporated as a limited liability company, and it has a separate legal entity. It is to be noted that wholly owned foreign company will be taxed according to local legislation.
 

China highly encourages Joint ventures this is because the country can learn new skills, technology, and expertise. In return, the investing company can benefit because of low production cost, low labor cost, and larger market. Joint Venture is the only opening gate to enter china under certain cases since some businesses are still regulated by the government completely.