To penetrate into China Market, the Joint Venture, Value-added reseller, Distributor, Wholly Owned Foreign Enterprise, and Global Development/Delivery Centre are the fundamental legal entities for overseas companies in China. Here is the definition of some legal entities, for your reference.
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- A joint venture is a business agreement, in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. You and the Chinese company exercise control over the enterprise and consequently share revenues, expenses and assets.
- A value-added reseller (VAR) is a company that adds features or services to an existing product, and then resells it (usually to end-users) as an integrated product or complete "turn-key" solution.
- A Distributor is an entity that buys products or product lines, and resells them to retailers or direct to the end users or customers. Most distributors provide strong manpower and cash support to the supplier’s promotional efforts. They usually also provide a range of services (such as product information, estimates, technical support, after-sales services, credit).
- The Wholly Foreign Owned Enterprise (WFOE) is a common investment vehicle for mainland China-based business. It is limited-liability corporations organized by foreign nationals and capitalized with foreign funds. This can give greater control over the business venture in mainland China and avoid a multitude of problematic issues which can potentially result from dealing with a domestic joint venture partner.
