China Foreign Investment

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equity joint venture;
� Entering into a cooperative joint venture; and,
� Setting up a wholly foreign owned enterprise.
3.1 Representative Office
Many firms choose to set up a representative offices in China initially as this helps the firm gain experience and acquire a better understanding of the size and potential of the market in the PRC. These offices function as a liaison between a firm's home office and trade organisations and related industries in China. Representative offices are useful for conducting market research and establishing contacts with prospective customers and potential partners.

3.1.1 Registration requirements

Representative offices are subject to restrictions. They cannot engage in certain activities and may not receive fees for services they provide, directly generate income, or sign contracts that would generate income. Representative offices, are however allowed to negotiate contracts which are later signed in the name of the home office ...

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(sales and manufacturing) in China while not requiring them to make the more sizable investment required to set up a wholly foreign owned enterprise. The branch is not considered a Chinese legal person but relies rather on the legal person of the foreign corporation. In this way the foreign corporation open to liabilities from its China operations, should things go wrong.

It is important to note a difference between a branch office and a representative office. A representative office does not have the power to engage in manufacturing operations or sell products on it's own behalf. Employees of the representative office are permitted to engage in sales negotiations, but when it ...

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