Establishing Your Presence

For companies that have significant business in China, a physical presence there is often essential to achieve business objectives. Since the start of 2007, more than 60,000 overseas companies have opened offices in China.

Why is a presence in China so important to these companies?

A local presence facilitates the development of all-important relationships with business partners and shows your commitment to long term partnership with them.
Enables real-time supervision and liaison on contract fulfillment, often more effective and at lower cost than if carried out from the home country.
On-site support for problem solving and administration of China projects.
On the ground access to market, technical and compliance information.

Options for Establishing Operations in China

	Advantage	Disadvantage
Representative Office	Lower cost Relatively short time to set up Fairly easy to exit Fully controlled by parent company	Can only engage in non-profit making activities Relatively rigid labour regulations Tax efficiency
Joint Venture	Immediate access to local knowledge of local partner Mature marketing, sale and distribution channels	High set up cost Different management and culture style Potential conflicts of interest with the Chinese partner Shared ownership & control
Wholly Owned Foreign Enterprise	Fully managed and operated by parent company More flexibility in strategic issues	Costs and capital to set up Immediate lack of local knowledge

The most popular sites for offices are Beijing, Shanghai, Guangzhou or Shenzhen. The decision as to where to locate your presence will depend on a variety of factors internal to your company but should also take into account local compliance and taxation regimes.

Contact Us for more information on setting up operations in China.