Since 2020, one set of rules
The Foreign Investment Law, in force since 1 January 2020, put foreign-invested companies under the same PRC Company Law as domestic ones. The old categories (equity JV, cooperative JV, WFOE law) were folded in, although “WFOE” is still the everyday name for a wholly foreign-owned LLC.
The main forms
Limited liability company (LLC)
The workhorse. Owned by one or more shareholders, with liability limited to the capital they subscribe. As a WFOE it is 100% foreign-owned; as a joint venture it has Chinese and foreign shareholders.
Company limited by shares (CLS)
Capital is divided into shares and the company can list on a stock exchange. Governance is heavier; it suits large groups and companies preparing for an IPO.
Foreign-invested partnership (FIP)
Used mainly by investment funds and professional firms. At least one general partner bears unlimited liability.
Representative office
Not a company at all, but a liaison presence of the foreign parent. It can’t earn revenue. See representative offices.
Quick comparison
| Form | Liability | Revenue | Typical use |
|---|---|---|---|
| LLC (WFOE / JV) | Limited | Yes | Trading, services, manufacturing |
| Company limited by shares | Limited | Yes | Large groups, IPO candidates |
| Partnership | General partner unlimited | Yes | Funds, professional services |
| Representative office | Parent fully liable | No | Market research, liaison |
Hong Kong is different
Hong Kong has its own company law. A Hong Kong limited company is often used alongside a mainland WFOE, as a regional trading or holding company.