Doing Business in China

China's economic business environment is keeping stable under the global recession.There are still many business opportunities in China.China is developing more and more economic stimulus package.Now Morgan Stanley raised its forecast for China's GDP growth to between 7% and 8% 2009.

More and more companies are setting up their own business in China.There are four forms to set up your business presence in China.Your China presence may be in the form of a wholly owned foreign enterprise, a contractual joint venture, an equity joint venture, a representative office or a local representation by a third party (local secretary/representation service companies).

Representative Office in China.The first possibility of how a foreign company can establish itself in China is through the establishment of a Representative Office (RO) in China. A Representative Office in China is not a separate legal entity but is considered to be part of its parent company. It is the most basic form of foreign investment and can be very useful, and in some cases even necessary, for most administrative decisions concerning the establishment of a business.

Sino-Foreign Cooperative Joint Venture in China.A Sino-Foreign Cooperative Joint Venture (CJV) is a joint venture between a Chinese and a foreign company within the territory of China. This joint venture in China is based on a cooperative joint venture contract in which matters like the terms of cooperation, the division of earnings, the ownership of property upon the termination of the contract term of the CJV, the sharing of risks and losses, etc are laid down.

Sino-Foreign Equity Joint Venture in China.In China a Sino-Foreign Equity Joint Venture is still the most widely used type of foreign investment, even though Wholly-Foreign Owned Enterprises are developing strongly. It is a limited liability company and it has the status of Chinese legal person. In China this is a crucial difference to the RO, because unlike the latter, a Sino-Foreign Equity Joint Venture (EJV) is capable of buying land, hiring Chinese employees independently, constructing buildings, etc.

Wholly Foreign-Owned Enterprise in China.A Wholly Foreign-Owned Enterprise (WFOE), also known as Wholly Owned Foreign Enterprise, is a limited liability company established within the territory of China through foreign investment only. WFOEs are becoming increasingly more popular, mainly because of the fact that there is no involvement of any Chinese investor thus giving the foreign company complete control over the newly established business.