WFOE, representative office, or no entity at all?
A WFOE can trade, invoice and hire in China but carries full accounting, tax and audit obligations. A representative office can only liaise and research — it cannot invoice. No entity at all is the right answer more often than people expect, using a distributor or cross-border e-commerce instead.
| No entity | Representative office | WFOE | |
|---|---|---|---|
| Can invoice Chinese customers in RMB | No | No | Yes |
| Can hold local inventory in own name | No | No | Yes |
| Can employ staff directly | No | Only via an authorised agency, limited headcount | Yes |
| Setup effort | None | Moderate | Substantial |
| Ongoing obligations | None in China | Filings and tax on a deemed basis | Bookkeeping, monthly and annual filings, annual report, audit |
| Exit | Walk away | Months | Commonly 9–12 months |
| Suits | Testing demand, B2B via distributor, cross-border e-commerce | Liaison and market study only | Sustained local operations |
The exit cost nobody prices in
Registering a Chinese company is a decision that is much easier to make than to undo. Deregistration is a formal process involving tax clearance for every year the company existed, and it commonly runs the better part of a year. Simply abandoning an entity is worse than closing it: unfiled annual reports produce an abnormal-operations listing, which follows the legal representative and can affect their ability to act for other companies. Decide as though you will one day have to close it, because eventually someone will.
The representative office trap
A representative office looks like a cheap way to “have a presence”. It cannot invoice, cannot trade and is generally taxed on a deemed-profit basis regardless of whether it earns anything. It suits genuine liaison and market research. It does not suit a business that intends to sell.
We advise on the structure and coordinate the registration. Bookkeeping, tax filing and audit are performed by a licensed accounting firm contracting with you directly — we help you select one and manage the timetable, and we do not do that work ourselves.
Want this done rather than explained?
Whether to enter, how, and with what structure — from US$900, 2–3 weeks.
Sources
All sources checked 23 August 2026. This page is general information, not legal, tax or customs advice. Requirements vary by product, market and circumstance — confirm your own position before acting.
