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Company Establishment in China

Establishing a business in China involves a lot of paperwork, requires a local “knowledge” of how the various government authorities work as well as a thorough understanding of the related regulatory issues. This can be a tedious process and take a long time to complete.

Given DTS’ strong contacts and relationships throughout China, we can assist you in navigating this complex process so that your business can start doing business in China without unnecessary delays and cost. In fact, a low risk approach is to begin your entry into the China market by “partnering” with DTS to manufacture and/or sell your products before establishing an independent company presence in China – possibly through a formation of a joint venture (see below).

Here are some interesting pros and cons with various forms of businesses

Wholly Owned Foreign Enterprises (WOFE)

Pros: The establishment of WOFE’s protects ownership and control. Moreover, it safeguards trade secrets and intellectual property.

Cons: China’s laws and the consumer market can be difficult for foreigners to grasp. Without experience and know-how, WOFE’s could encounter several hardships. Establishing relationships with local suppliers with effective logistics can be notoriously challenging in China, particularly outside of China’s more developed eastern regions.

Joint Ventures (JV)

Pros: A JV with a Chinese partner can provide the foreign investor an individual that possesses market familiarity, experience, and local connections.

Cons: JVs can encounter differences of opinion between the partners on the control and direction of the joint venture. It is essential that you trust the partner you choose by doing business with them for awhile before moving into a formal joint venture relationship.

Merger and Acquisition (M&A)

Pros: A domestic brand offers immediate consumer recognition. Moreover, the M&A target also offers the possibility of providing market familiarity, experience, and local connections.

Cons: M&A targets can be more costly than homegrown operations, and possibly overpriced. Elements of China’s business environment lack transparency, calling into question much of what is stated on paper.