In order to deploy your website on a server in China, you must first establish a business entity in Mainland China. The three common options for foreign enterprises registering a presence in China are Representative Office, Wholly Foreign Owned Enterprise and Joint Venture.
A Representative Office (RO, An enterprise resident representative offices) has a relatively short establishment process (approximately 1-2 months) and does not demand a registered capital requirement. RO’s are limited to marketing, research, publicity activities, liaison activities that do not involve direct revenue generation. An RO is also not able to issue invoices locally in RMB. As an RO is not a legal entity, liabilities extend to the parent company.
To be eligible to establish an RO, the parent company must have been in existence at least for 2 years. Other limitations are that the firm cannot directly employ staff, And a maximum of 3 representatives can be employed, including one chief representative.
A Representative Office is, therefore, an ideal option for companies seeking to lay a foundation for future investment.
A Wholly Foreign Owned Enterprise (WFOE) has higher establishment requirements but can conduct a full range of business activities within FDI restrictions. A WFOE can also sign contracts and collect/disburse payments in RMB, issue special tax invoices in RMB (Fapiao), directly employ staff.
A WFOE has separate liabilities from a parent company as a limited liability company. The establishment process typically takes 2-4 months, and the minimum registered capital amount varies according to the business activities of the company.
A Joint Venture (JV) is a limited liability company formed between a foreign company, individual or investor(s) with a Chinese company where the foreign partner/s own more than 25 percent share of the new JV entity. It is important to distinguish that a JV does not represent a merger between two companies, but rather a new entity that is partly owned by foreign and Chinese partners. The JV participants share in supplying the investment, managing responsibilities, and receiving profits and losses. The liability of the shareholders is limited to the assets contributed to the new entity and does not extend to any parent companies.