By Sun Jin(Marlow), Chinese attorney at Law,

Question: Dear Lawyer, I wold like to establish my business organization in China, but I am not sure which type of formation is suitable to me, a WFOE (wholly foreign owned enterprise) or a RO (standing represeatitve office) ? And how can I get my working visa (Z visa) and residency permissions in China? Can I manage to get a Green Card in China please?

Answer:


A WFOE is a company limited, we think it's near to a company limited in most countries, so we here mainly make an Introduction of standing represtative office (here after referred to as "RO") of a foreign company (here after referred to as "the Company") in China.

For foreign companies who would like to have some tentative actions in Chinese market, or merely to send someone to stay and work in mainland China (for example) closely with suppliers, setting up a standing represetative office is one of the best solutions. RO of a foreign company is an organization of business contact acting for and on behalf of the Company, so a RO is not an independant Legal Person but a company branch, and in most situations it can not carry on business/commercial actions that will make profits directly, in details as follows:

1. It can not sign any sales and puchases contract; and
2. It can not receive income payment; and
3. It can not invoice; and
4. It can not remit funds to abroad.

But it still can carry on some actions so as to enable the purpose of business contact, in details as follows:

1. It can apply it's own ****; and
2. It can employ clerks, and the foreign clerks including the chief represtative and representatives in the RO can apply for Z visa(that is working visa) and residency permission in mainland China if he/she is a foreigner; and
3. It can carry on business actions under name of Company; and
4. It still needs to pay some taxes.

So a RO can help the Company to do some business contacts, for example for the representative office of a trading company:

1. Soucing factories; and
2. Negotiation of new business; and
3. Cargo inspection; and
4. Goods showroom; and
5. Investigation of local market; and
6. Negotiation of cooperation of technology; and so on.

So before a freign investors decide to establish a JV or WFOE, it's necessary for them to establish a RO to get some knowings about Chinese markets. In fact, most ROs who do trade business in China are carrying on their daily business under name of the Company, or via one Chinese export agency/broker company.

Advantages of formation of a RO when comparing with that of a WFOE:

1. The main advantage is that the formation procedure is simple and quick; and
2. No registering capital requirements.

Also we think that establishing a RO in China and then as representative/s to apply for Z visa and/or residency permission is the quickest and most convinient legal method to get the visa and/or the permission. Green card in China? If you are merely an ordinary businessman, you may forget it, nearly impossible.