Types of Legal Entities in China — WFOE vs JV vs Rep Office Explained
- Roman Verzin
- Apr 24
- 3 min read
Updated: Jul 9
If you’re planning to open a company in China, your first step is to choose the right legal entity.
Some give you full control. Some limit what you can do. And some may look like a company — but aren’t.
Here’s a practical breakdown of the main options for foreign founders.
1. WFOE — Wholly Foreign-Owned Enterprise
This is the most common setup for international businesses in China.
A WFOE is a limited liability company 100% owned by a foreigner — either an individual or a legal entity.
What you can do with a WFOE:
Trade (import/export, wholesale)
Provide services and consulting
Hire local and foreign staff
Open corporate bank accounts
Receive payments in RMB or foreign currency
Distribute dividends (under tax and compliance rules)
It operates like a normal Chinese company — with one difference: it’s foreign-owned. Which means it’s usually reviewed more carefully by banks and regulators.
Two options for ownership:
Personal ownership:Â faster and simpler. You only need to legalize your passport.
Corporate ownership: takes more time. You’ll need to legalize the entire company chain, and banks will do extra checks.
Unless you have a clear reason to use a company as the owner, personal ownership is usually the more efficient choice.
2. JV — Joint Venture
A JV is a partnership between a foreign investor and a local Chinese company. It’s also a full legal entity under Chinese law.
It used to be mandatory in some sectors. Now, it’s mostly optional — but still useful in specific cases.
When a JV makes sense:
You’re in a restricted industry (education, media, publishing): you’ll need a local partner to get licensed.
You want strong market credibility: global brands like Starbucks and GM entered China through joint ventures.
You’re from a high-risk country: like Russia, Iran, or parts of Africa — where WFOEs face more bank scrutiny.
But be careful:
If your partner owns 51%, they control the company.
If the relationship breaks down, it’s hard to exit.
So before launching a JV:
Set clear agreements and roles
Choose your partner carefully
Have a clear exit strategy
3. RO — Representative Office
This is the simplest structure — and the most limited.
A Representative Office is not a company. It’s just an official presence of a foreign company inside China.
What you can do with an RO:
Marketing and PR
Monitor the Chinese market
Manage supplier relationships
Rent office space
Host foreign employees legally
What you cannot do:
Sign contracts
Receive payments
Issue fapiao (invoices)
Run any revenue-generating business
In short: ROs are for presence, not for operations.
We usually recommend them only for companies that need a legal way to relocate foreign staff — but don’t plan to trade or sell in China.
For most founders, ROs are too limited.
4. Other Structures (Usually Not for Foreigners)
China has other legal forms:
Joint Stock Companies
Sole Proprietorships
State-Owned Enterprises
But they are either restricted or not relevant to foreign investors. No need to get distracted by them.
So which one should you choose?
Here’s a quick summary:
✅ WFOE — Best for most businesses.
If you want full control, trade, consult, or operate independently.
✅ Manufacturing WFOE — If you plan to produce goods in China.
✅ JV — If you need a strong local partner, or operate in a regulated or sensitive industry, or come from a high-risk country.
✅ RO — Only if you need an official presence for staff, but no operations or revenue.
Want help choosing the right setup?
At United Suppliers Group, we help international founders — especially from high-barrier or underbanked regions — register legal entities in China, Hong Kong, and Singapore.
If you’re not sure which structure fits your case, or if you need help with document preparation, partner search, or compliance — our team can guide you step by step.
Contact us for a private consultation — or explore our full service list on the website.