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There are several types of business setup in Beijing; the
following are common types for business formation: 1.Wholly foreign owned
enterprise (WFOE); 2. Representative office (RO); 3.Cooperative joint venture
(CJV); 4. Equity joint venture (EJV); 5.
Foreign invested partnerships enterprise (FIPE).
Beijing Company Formation-WFOE
The Wholly Foreign Owned Enterprise, abbreviated WFOE, is a
common investment vehicle for mainland Beijing -based business. The unique
feature of a WFOE is that involvement of a mainland Chinese investor is not
required, unlike most other investment vehicles. WFOEs are limited-liability
corporations organized by foreign nationals and capitalized with foreign funds.
This can give greater control over the business venture in mainland Beijing and
avoid a multitude of problematic issues which can potentially result from
dealing with a domestic joint venture partner.
Beijing Company Formation -RO
A Chinese representative office (RO) is an institute setup
in Beijing, representing its parent corporate for liaison with Chinese
counterparts. A RO is not considered to be a separate legal entity. It can not
directly engage in business operation. However, through which its parent
corporate can enter into contracts with its supplier/customers in Beijing in
its own name, but not under the name of RO. A representative office is popular
for those who are willing to enter Beijing at the test period of business and
investment.
Beijing Company Formation-CJV
In most respects, CJVs are structurally similar to EJVs.
Unlike EJVs, however, CJVs can be established either as a limited liability
company as a non-legal person, in which the partners are subject to unlimited
liability and thus entirely liable for any losses. The rights and obligations of
the JV partners concerning issues such as distribution, investment, operation
and sharing of profits/losses and risks are determined by the individual joint
venture contract.
Beijing Company Formation-EJV
The corporate form of an EJV is the limited liability
company, which possesses the status of a Chinese legal person. It involves
joint investment and operation and the sharing of profits and losses, as well
as risks in proportion to the partners’ respective shares in the registered
capital.
Beijing Company Formation-FIPE
The Foreign Invested Partnership Enterprise (FIPE) is a
unlimited liability business entity without minium requirements on registered
capital.A partnership in the People's Republic of China is a business entity
governed by the Partnership Enterprise Law passed by order of the President of
the People's Republic of China to authorize and govern partnership enterprises.
A partnership is a type of business entity in which partners share with each
other the profits or losses of the business undertaking in which all have
invested.
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