The business landscape is very different in China than western-based companies are accustomed to. Primasia is here to help you navigate the business landscape in China and Hong Kong.
China
presents western-based businesses with an incredible potential for
growth and profit, as well as a host of complex issues. It is advised
to seek the assistance and advice of a China-based consulting firm to
navigate these complex issues. Primasia will be able to help you
understand and navigate these complexities, that range from legal issues
to business operations and beyond.
There
are two distinct business models used in China: Sales Office via Labor
Dispatch and the Wholly Foreign Owned Enterprise (WFOE). There are
unique advantages and disadvantages to each business model, and your
company will need to evaluate each one thoroughly to gauge which will
best meet your financial and corporate objectives, as well as which one
provides the least amount of risk.
Below you’ll find a basic description of the two business models to give you a better understanding of doing business in China:
Sales Office via Labor Dispatch
Sales Office via Labor Dispatch
This
business model involves using the services of a Professional Employment
Organization (PEO). The PEO will provide the business structure in
China should your company not have a physical presence in the country–
ie. they’ll act as your subsidiary. A PEO will provide services such as
administration, fiscal and legal. Western-based companies will benefit
from this business model as it saves them from having to navigate all
the legal complexities as well as the complex logistics of needing to
set up a company in a foreign country.
A
PEO will provide all the necessary human resources aspects needed to
operate in China. Employees will work under contract with the PEO and
not directly under the foreign company. This way a foreign company will
not have to deal directly with employment issues, as the PEO will handle
payroll, tax compliance, visas, labor laws, expenses management, health
insurance and office rental.
Wholly Foreign Owned Enterprise (WFOE)
According
to Chinese legislation, a company owned by 25% or more by foreign
investment is categorized as a Foreign Invested Enterprise (FIE). Most
of the FIE entities operating in China are a WFOE. A WFOE operates as a
limited liability company in China.
The
Chinese government introduced the WFOE business model as a way of
exporting technology development and manufacturing. However, foreign
companies used this model as a way of setting up consulting and
management services in China. It is vital to understand that any capital
or investments used by a WFOE should be from an individual, stand-alone
entity and not from a WFOE that already has registered operations or
branches in China.
Primasia
provides different market entry solutions to assist you in expanding
your business into China. Our team of experts can advise on all the
legal, administrative and tax implications for your company, as you
explore expanding your business to Hong Kong and/or China. China
presents companies with huge potential for growth in the market, but
business setup does take time, investment and patience as you are being
guided through the complexities. Primasia is the perfect partner to help
you access a tremendous market share opportunity, check out our website
to learn more or call us at +852 2882 2088.
Connect with Primasia Corporate Services Limited
Hong Kong Headquarters: Suite 1106-08, 11/F., Tai Yau Building, No. 181 Johnston Road, Wanchai, Hong Kong
Website: https://www.primasia.hk/
Twitter: https://twitter.com/PrimasiaHK
Credit: Prosperity Research Digital Agency(PRDA) provides branded content catered to your business, in English, and Traditional or Simplified Chinese.
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