The option to purchase a company in China can be suitable for some entrepreneurs who do not want to incorporate a new company or for those who need to acquire an existing company and use an already established enterprise to enter the market. Company purchase in China can be done either by buying a shelf company or by entering company mergers and acquisitions. Our Chinese lawyers can help you decide what business option is proper for your needs and your business plans.
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Buying a company in China
Shelf companies or ready-made companies in China were incorporated and have been left to age. They have no commercial activities and thus no liabilities and no risks for investments. The new business owner will start the company’s economic activities and help the legal entity grow on the market.
The direct control of businesses by foreigners in China can be highly regulated and non-native business owners have certain options for investing in China. They can purchase businesses through a holding company owned by a Chinese national or use other methods of investment. One of the types of companies available for incorporation in China especially for foreigners is the Wholly Owned Foreign Enterprise (WOFE). Our law firm in China handles company incorporation procedures and our Chinese lawyers can help you decide what company is adequate for your needs.
Mergers and acquisitions in China
Although sometimes there is a lengthy process related to company mergers and acquisitions, these are possible in China and they can sometimes be the right option for investors. Business owners who want to take over an existing company or those who want to merge an existing company with another will need to receive approval from various governmental agencies in China.
A very important step during the company purchase procedure in China is due diligence. This investigation performed by a team of specialists will reveal information about the company prior to purchasing it. Our attorneys in China will handle the due diligence process for company verification so that your investment will be a safe one.
Why are entrepreneurs interested in buying Chinese firms?
Even though it is known the fact that China is interested in purchasing companies from abroad, especially from the US, there are numerous cases when foreign entrepreneurs want to buy Chinese firms which are registered companies, but with no activities for the moment or put on standby. A foreign investor who wants to purchase a company in China can choose from sectors like retail, agriculture, manufacturing, real estate, media, distribution, food or engineering. There are numerous firms where capital is needed and where investments can be considered as long-term plans with the possibility of producing more money if business plans are measured in accordance with the market requests in different areas of interest.
According to statistics, the health care, the education, the finance, or the shipping sector are among fields where many Chinese enterprises are preferred as starting points for any investor willing to purchase a ready-made business and to develop its potential as much as possible.
Types of companies you can purchase in China
Hotels, premium free leaseholds, resorts, retail warehouses, commercial car dealers, electrical appliance retailers, consultancy, insurance, recruitment, medical supply, IT consultancy, telecommunication services are top choices for those interested in purchasing companies in China with the purpose of future commercial activities and development on the market. Once you have decided to purchase a company in China, it is recommended to ask for legal advice and guidance in this matter from our Chinese attorneys.
If you want to know more about doing business in China and about how to buy a Chinese company, please do not hesitate to contact our law firm in China.