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Setting Up An Overseas Office In China

Companies often take a staged approach to setting up in China. Many start by exporting a small amount to test the market.

The main options for entering the Chinese market are:

• Using agents or distributors
• Establishing a presence in China through either setting up a Wholly Foreign Owned Enterprise (WFOE) company, opening a representative office or working with a partner through a JV
• Exporting directly
• e-commerce
• Licensing and franchising
• Using a UK-based consolidator/exporter
• Using a business incubator in China allowing a year round presence on the ground

Agents and distributors

China’s size means you might need a number of agents and distributors to cover different regions. It can take time to find the right partners.

Setting up a company

You should seek professional advice early on due to the difficulties in altering business structure once a legal entity is incorporated. Foreign companies cannot legally employ Chinese staff unless the company is registered in China.

Incorporating a company in China is a complex process requiring various approvals. There are several options:

• A representative office can be the easiest way to establish a presence, but has limited powers and cannot conduct sales
• JVs with a Chinese partner may be restricted to less than 50% foreign ownership in some industries
• WFOEs are 100% foreign owned private, limited liability companies and are the most popular option if you want a permanent presence in China

CBBC offers a ‘Launchpad’ service enabling companies to test the market before committing to a permanent presence.

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