Purposes of China Market Entry .
This China company formation depends upon what business activities you intend to do in the China market. Broadly speaking, it can be classified as:
a) Act as a Cost Centre (China entry strategy)
To register a WFOE as a manufacturing factory in China and directly export and sell outside China. In this category, import of know-how technologies, and intelligence or knowledge, and new materials or sources, clients can save production costs using Chinese labour resources, and earn maximum profits from selling to Global Markets. However, due to the fact that China has many factories, it creates a result of very high air-pollution, and directly affects the health and environment of the Chinese people. You can see in Beijing, when people go outside, they need to carry face masks. Also, the labour costs are increasing. These days Chinese people are not as willing to work in factories, they are only willing to work in a job that can provide high pay and good working conditions. Because of this, more factories have shifted from China to other local paid or undeveloped countries like Vietnam. Therefore, if you do want to setup a factory, we recommend you to setup in other countries instead of that in China.
b) Act as a Sales Centre (China entry strategy)
To register a WFOE as a sales office in China, and promote whole products or services in the whole of China can be a way of how to enter the Chinese market. China has over 14 billion people. With limited resources in China and high demand of new products or services or new sources from Chinese people. With very high consumption power, clients can through WFOE, market their services or products in China through direct whole selling, retailing, distributors or other means. It is these China company formation opportunities you need to take now, otherwise you will miss the chances to become a millionaire or even a billionaire! Lucky for you we offer a China business registration service. China is regarded as the second largest economy in the world, as it is still in the developing stage, it will become the biggest economy one day. Therefore, it is at this stage you need to start your China company registration and put your foot in China.
c) Act as a Purchasing or Sourcing Agent (China entry strategy)
To register a WFOE as a purchasing agent in China, clients can buy the products from the Chinese factories at a reduced fee, and can sell to Global Markets and earn maximum profits. Clients in this category cannot make an application of refund of VAT. Note that a representative office is not allowed to claim for VAT refund. Due to the fact that Hong Kong is an open window between overseas and china. It is a practice that using a Hong Kong company to act as a purchasing agent in China, and then sell overseas. According to Hong Kong Tax Law, as the buying activities and selling activities are outside Hong Kong, it is legal and tax free in Hong Kong if you shift the profits to a Hong Kong company. This is the practice most overseas businessmen are using so as to maximise their trading profits.
d) Importation of Offshore Human Resources and Shift of administrative functions to China. (China entry strategy)
Because of increasing development in China, with high demand of innovations, or inventions, there has been a high demand of human resources in the whole of china. It is the way WFOE can import human resources from outside China. Using WFOE. One China market entry strategy is that clients can get a work visa for their foreign employees and stay and work in China. Note that a representative office is not allowed to apply for a visa for foreign employees working in China. Also, like HSBC, the administrative costs are very high in Hong Kong due to high costs of rent, as well as labour and staff costs, etc. HSBC has shifted the backup functions to Chinese office, so they can save a lot of administrative costs. More large companies also follow the act of HSBC.