Comparison of Entity Types

Which Business Entity Should You Choose in China?

Entering the Chinese market requires careful consideration of the appropriate business entity. The choice of company type affects your operational control, tax obligations, legal liability, and long-term growth potential. Tannet provides global investors with expert guidance to select the optimal structure for their business in China.

1. Wholly Foreign-Owned Enterprise (WFOE)

Entering the Chinese market requires careful consideration of the appropriate business entity. The choice of company type affects your operational control, tax obligations, legal liability, and long-term growth potential. Tannet provides global investors with expert guidance to select the optimal structure for their business in China.

Key Advantages:

• Full operational control
• Limited liability
• Flexible management structure
• Direct profit repatriation

 2. Representative Office (RO)

An RO serves as a liaison or branch of a foreign company. It cannot engage in direct profit-making activities but allows market research, networking, and contract negotiations under the parent company’s name.

Key Advantages:

• Low setup and operational costs
• Ideal for market testing
• Direct communication with local clients and partners

3. Cooperative Joint Venture (CJV)

A CJV offers a flexible partnership arrangement between foreign and Chinese investors. Profit-sharing, risk allocation, and management roles are defined by the joint venture agreement, allowing customization to suit the specific project.

Key Advantages:

• Flexible profit and risk sharing
• Tailored to unique investment projects
• Facilitates collaboration with local expertise

4. Equity Joint Venture (EJV)

An EJV is a limited liability company jointly owned by foreign and Chinese partners, with profits, losses, and risks shared according to investment proportions. This structure provides legal recognition and strong local credibility.

Key Advantages:

• Legal person status
• Shared risk and capital
• Access to local resources and networks

5. Foreign-Invested Partnership Enterprise (FIPE)

A FIPE is a partnership model allowing two or more partners to share profits, losses, and responsibilities. It can be established as either a general or limited partnership, offering flexibility and minimal capital requirements.

Key Advantages:

• Flexible capital and structure requirements
• Shared responsibilities among partners
• Suitable for small and medium-sized enterprises

Why Choose Tannet

Selecting the right entity type is critical for operational success and regulatory compliance in China. Tannet provides one-stop professional services, including entity registration, regulatory liaison, tax planning, IP protection, and ongoing operational support, ensuring that your investment is both secure and optimized for growth.

Contact Tannet

If you are planning to invest in China, Tannet offers full-service support from start to finish. Our expert team provides customized solutions to ensure regulatory compliance, streamline business setup, and protect your investment, enabling a smooth and successful entry into the Chinese market.