Three ways to establish a legal presence in China — each with different legal status, operational rights, liability exposure, and setup requirements. We help you choose the right structure and manage the full registration process.
The structure you choose determines what your entity can legally do in China — invoice clients, hire staff, repatriate profits, import goods. Getting this wrong at setup creates problems that are expensive and time-consuming to fix.
The three most common structures for establishing a foreign presence in China operate under fundamentally different rules. The table below summarises the key differences.
| Subsidiary (WFOE) | Branch Office | Representative Office | |
|---|---|---|---|
| Independent legal entity | ✓ Yes | ✗ No | ✗ No |
| Set up by | Overseas parent company | Existing China subsidiary (WFOE) | Overseas parent company |
| Can invoice & generate revenue | ✓ Yes | ✓ Yes | ✗ No |
| Can hire staff directly | ✓ Yes | ✓ Yes | Via HR agency only |
| Parent company liability | Limited to registered capital | Unlimited — WFOE parent bears full liability | Unlimited — overseas parent bears full liability |
| Registered capital required | ✓ Yes | ✗ No | ✗ No |
| Can repatriate profits | ✓ Yes | Remit to parent WFOE | ✗ No |
| Setup complexity | Medium | Medium — requires parent WFOE first | Low |
| Best for | Full operations, all industries | Geographic expansion by existing WFOE | Market research, liaison, non-profit activities |
Independent legal entity — most flexible
Extension of an existing China WFOE
Liaison presence — limited activities only
A Wholly Foreign-Owned Enterprise (WFOE) is the most common and most capable structure for foreign companies operating in China. As an independent legal entity incorporated in China, it is the domestic responsible party for all operations conducted under its licence — separate from its overseas parent in terms of legal liability.
Under China’s 1210 cross-border e-commerce import framework, goods can be stored in bonded warehouses and sold to Chinese consumers without going through standard general trade customs clearance. The framework requires the overseas brand or rights holder to appoint a domestic responsible entity (境内负责人) — a China-registered company that takes legal responsibility for product compliance, after-sales service, and regulatory accountability.
A WFOE set up by the overseas brand owner serves as this domestic responsible entity. For regulated product categories — particularly cosmetics and health supplements — this structure also unlocks a significant benefit:
Cosmetics & Health Supplements: Under the 1210 framework, the domestic responsible entity (WFOE) can act as the importer of record, allowing the overseas brand to bypass the standard “first-time import licence, registration, or filing” requirement that applies under general trade. This is one of the most operationally significant advantages of having a WFOE for brands entering China through cross-border e-commerce.
For full details on WFOE registration, entity structure, and registered capital planning, see our dedicated pages.
WFOE Registration →A branch office in China is not a new legal entity — it is an operational extension of an existing WFOE, established to conduct business in a different city or province. The parent WFOE remains the legal entity; the branch operates under the parent’s business licence and bears no independent legal status.
Important distinction: A foreign company registering directly in China always creates a subsidiary with independent legal entity status — this is a WFOE. A branch office (分公司) can only be set up by a WFOE that already exists in China, as an extension of that domestic entity into another location.
A Representative Office is the simplest way for a foreign company to establish a legal presence in China — but it comes with significant operational restrictions. An RO cannot generate revenue, issue invoices, or sign commercial contracts in its own name. It exists solely to support the overseas parent’s activities in China.
Considering a Representative Office? See our full guide covering registration requirements, permitted activities, annual compliance, and how an RO compares to a WFOE for your specific situation.
RO Registration Guide →No. A branch office (分公司) in China can only be established by an existing China-registered entity — typically a WFOE. A foreign company registering a presence in China for the first time always creates a new legal entity, which is the WFOE. The branch office structure is for domestic geographic expansion, not for initial market entry.
No — a WFOE can establish branch offices in any city in China regardless of where the parent WFOE is registered, provided the target city’s local SAMR accepts the registration. Each branch requires separate tax registration in the branch city, and social insurance for branch employees is handled locally. The business scope of the branch cannot exceed that of the parent WFOE.
Not directly — there is no conversion process from an RO to a WFOE. If you decide to move from an RO to a WFOE, you would register a new WFOE and separately close the RO through the formal deregistration process. This is one reason why companies with any realistic expectation of conducting business in China often start with a WFOE rather than an RO, even if initial activities are limited.
No. A branch office does not require separate registered capital — it operates under the parent WFOE’s capital and legal standing. This makes it less costly to set up than a new WFOE. However, the parent WFOE’s capital position and financial standing will be reviewed as part of the branch registration process, as the parent bears unlimited liability for the branch’s activities.
View our transparent pricing for company registration and ongoing services — or speak with us directly to discuss which structure fits your situation.