Establishing a Business in China

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As China races into the world economy, many foreign-owned enterprises are looking forward to establishing themselves here to become part of the fastest growing business market in the world. The business model you can use in China will be determined by these WTO guidelines and time frame. The options range from a representative office, to a joint venture company, to a wholly-foreign owned enterprise (WOFE).

Representative Office works well for companies that only want to sell a given product here in China that is invoiced from overseas. But the market becomes limited if the customers are invoiced and must pay through an overseas transaction.

Joint Venture Company structures have allowed foreign companies to enter the Chinese market early in the process of Chinese economy's growth. The Joint Venture Company is faced with the risks of selecting a great local partner. The key thing is to make sure you have done your due diligence on the partner, and to have a strong contract and articles to fall back on if something goes wrong.

The fastest growing type of business established in China is the WOFE- solely because of the ability to control your own destiny and the opening of the Chinese markets to foreign firms through business accession. You must be careful in deciding exactly how the business will be set up, what tax implications you may face and what possible steps need to be taken to repatriate profits.

In the end, it doesn't matter how it's structured and what due diligence you need to perform in order to maximize your efforts. Look for experts in the field to avoid to lost time, and more importantly lost money.

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