Decide between a Wholly Foreign-Owned Enterprise and a Joint Venture

Today, many more companies are going the wholly foreign-owned enterprise (WFOE) route than joint venture (JV) option. Either can work for your company, depending on circumstances and goals.

In some respects, you can think of JVs as the faster way to start up — particularly with getting distribution, having a factory and workforce, and making your way through the approvals process faster. But you do run into a lot of trade-offs that can be apparent in the medium- to long-term. You need your partner’s consent for many key decisions. Plus, you increase the chances of intellectual property (IP) leakage.

Starting a WFOE usually takes longer to get your operations going, and you have to figure out a lot more on your own than with a JV. However, you never have to worry about dealing with a problematic partner.

Chapter 7 can tell you more about JVs and WFOEs.