Practice Area · 03
China Investment — Enter, Structure & Operate Compliantly
The right China structure affects control, tax, employment, licensing, profit repatriation, data flows and exit options. Li & Shi China Counsel helps international investors design and execute legally sound China market-entry and investment structures.
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Overview
Market Entry Insight
China market entry is not only a registration exercise. The legal structure chosen at the beginning shapes operational flexibility, liability allocation, governance rights, foreign exchange treatment, licensing requirements and future exit strategy. Mistakes in business scope, registered capital, shareholder arrangements or local compliance can become costly once operations begin.
China’s foreign investment regime is based on the Foreign Investment Law, the Negative List and related registration and information-reporting rules. Most sectors are open to foreign investment, while restricted sectors require careful structuring and prohibited sectors remain unavailable. In practice, investors must also consider local registration practice, tax, employment, data, IP and commercial contract issues.
We assist clients from initial feasibility review through structure design, registration coordination, due diligence, transaction documentation and post-closing compliance.
Structures
Common Structures
Wholly Foreign-Owned Enterprise (WFOE / FIE)
A foreign-invested limited liability company wholly owned by overseas shareholder(s), suitable for many consulting, technology, manufacturing and service businesses outside restricted sectors.
Joint Venture
A company formed with Chinese partner(s), useful or required in certain sectors but demanding careful governance, reserved matters, deadlock, IP, profit distribution and exit provisions.
Representative Office
A non-revenue-generating presence for liaison, market research and promotion. It cannot directly invoice, sign revenue contracts or hire local employees directly.
China M&A
Acquisition of equity or assets in a Chinese business, requiring due diligence, approvals/filings where applicable, transaction documents, tax planning and post-closing integration.
Process
Market Entry Process
Services
M&A Services
A
Legal Due Diligence
Corporate history, equity structure, assets, contracts, debt, litigation, employment, IP, data, licences, environmental and compliance exposure.
B
Transaction Structuring
Equity deal, asset deal, capital increase, JV, option structure or staged acquisition, with attention to approvals, tax and exit.
C
Transaction Documents
Term sheets, share purchase agreements, capital increase agreements, shareholder agreements, disclosure schedules and closing deliverables.
D
Closing and Integration
Registration changes, corporate governance implementation, employment transfer, licence updates and post-closing risk remediation.
Representative Matter
Foreign-Invested Entity Setup - European Engineering Group
A European engineering group required a China entity capable of supporting manufacturing or supply-chain operations under a defined commercial timeline. The matter required careful business-scope drafting, registration sequencing and coordination with local authorities and service providers.
The legal work included structure analysis, documentation preparation, registration coordination, bank-account support and post-registration compliance guidance.