A Joint Venture is a business arrangement consisting of two partners (one Chinese, one foreign) creating a new business entity. Both take equal responsibility for management, expenses, profits and losses.

Joint Ventures are sometimes the only way to register in China if a certain business activity is still controlled by the government, e.g. construction, car manufacturing, cosmetics etc.

The WFOE is a business arrangement where a foreign company invests on its own without a Chinese partner. Earlier on, the WFOE format was predominantly used for service providers such as consulting and management services, software development and trading.

Increasingly, more manufacturing enterprises are now also using the WFOE route to establish a presence in China.

Representative Offices are established by foreign companies to engage in activities such as business liaison, product promotion, market research and technology transfer.

Representative Offices are not officially allowed to engage directly in operational activities. Similarly, they may not invoice or receive payment in China.