What are the common modes of entry?
There are four general modes of entry: 1. Agency or representative office – This is a traditional contracting relationship between a Foreign and a Chinese firm. The foreign firm may choose to set up a representative office in China to monitor and respond as needed. 2. Joint Venture (JV) – Joint ventures have been one of the most favored modes of entry. In a joint venture the foreign parties and Chinese companies contribute assets to a new entity and share ownership. 3. Wholly foreign owned enterprises (WFOE) – The option of entering as a WFOE has become increasingly viable with China’s entry into the WTO. A WFOE is usually created as a startup; however creating a WFOE through acquiring a Chinese company can have many benefits. 4. Mergers & acquisitions. The mode of entry is determined by the nature of the transaction and the amount and type of risk you are willing to bear. Mergers and acquisitions can offer many of the benefits of a JV and a WFOE. M&A can provide enhanced speed to mark
