There are four primary entry modes; export entry, contractual entry, equity entry, and representative offices. Export Entry is using an intermediary agent for the entire process or handling export –in house and a local Chinese distribution partner for import and sales in China. It doesn’t require a large capital expenditure but provides limited control. Contractual Entry is licensing your brand to individuals and companies in China or sub-contracting with local manufacturers. Requires less capital expenditure but again provides limited control. Equity Entry is entering the market by equity includes Wholly Foreign Owned Enterprises (WFOE) such as Manufacturing, Trading, or Service WFOE (examples are consulting, training, restaurants and management service companies), a Foreign Invested Commercial Enterprise (FICE allows greater flexibility in terms of business activities that include retail, wholesale and franchise), or through a Joint Venture or M&As. Representative Offices is a Rep Office represents the interests of the foreign investors acting as a liaison office legally established for the parents company. It may conduct market research, develop partnerships and business channels; however, all business transactions are handled by parent company, mainly the issuance of commercial invoices. Rep Offices do not have a minimum investment requirement since they are not considered a Foreign Investment Enterprise.
Cultural and linguistic differences these affects all relationships and interactions inside the company with customers and with the government. Understanding the local business cultural is critical to success. Quality and training of local contacts and/or employees evaluating the skill sets of determining if the local staff is qualified is a key factor for success. Political and economic issues, policy can change frequently and companies need to determine what level of investment they are willing to make, what is required to make this investment, and how...