Chinese customers15 min readFacts checked on November 1, 2026

How do you enter the Chinese market?

In stages, committing only when a real need forces the next step, because getting out takes months too.

Hugo Debrabandere, Founder, Index in Chinachecked against 26 sources

Chinese customers

1Check sector, mark, demand
2Sell from abroad
3Add a light presence
4Form a company

The short answer

Go in stages. First check that your sector is open to foreign ownership, file your trademark and test demand from abroad. Sell through contracts or distributors next. Form a company only when you need local staff, stock or Chinese invoices. Leaving takes months too, so weigh the exit before you commit.

China's foreign investment negative list has 29 measures in its 2024 edition, the latest we could confirm, and none left for manufacturing.
The EU SME Centre put trademark registration at 8 to 12 months in 2025, longer than the 3 to 6 months China Briefing gives for a WFOE.
China Briefing says closing a WFOE typically takes 6 to 14 months, with tax clearance alone at 4 to 8 months.
A representative office caught doing profit-making business faces fines of RMB 50,000 to 500,000 under rules revised in March 2024.
In the 2026 European Chamber survey, 17% of respondents in China were optimistic about profits for the next two years.

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Claude

Perplexity

Many China guides open with a choice of legal structure. That’s the wrong end to start from, because a structure is the hardest thing to undo.

This guide sets out the order: what to check, what to try from abroad, and what should push you to commit. It’s part of how to find Chinese customers.

What is the best way to enter the Chinese market?

There’s no single best way, as the EU SME Centre says.¹ Our reading of the sources favors stages: each step costs more and is harder to undo, so take it only when a real need calls for it.

Fig. 1Staged entry

Check
Sector, brand, demand
Sell from abroad
Contract, distributor, cross-border e-commerce
Light presence
Representative office
Company
WFOE or joint venture

Each step costs more and is harder to undo.

Stage	What you do	Chinese entity?	What moves you on
1. Check	Read your sector’s rules, file your mark, test demand	No	The sector is open and people search for what you sell
2. Sell from abroad	Contracts, exports, a distributor, cross-border e-commerce	No	Repeat orders
3. Light presence	A representative office	Registered office, no legal personality ⁸	You need research or liaison on the ground
4. Company	A WFOE or joint venture	Yes	You need staff, stock or Chinese invoices ²

Stages aren’t a ladder you must climb. You may never need to leave stage 2.

Law firm Harris Sliwoski formed more than 100 Chinese entities for clients from 2005 to 2015, by its own estimate, and fewer than ten from 2016 to 2025.²

Stage 2 has its own guide: how to sell to Chinese clients without being in China.

Is China still worth entering?

It depends on your sector, and the evidence points both ways. Nobody can settle this from a market total, so here’s what the public signals show.

Official tone: The US government guide calls China a complex and increasingly challenging place to operate.¹²
New companies: The Ministry of Commerce counted 70,392 new foreign-invested firms in 2025, up 19.1%.²⁰ January to July 2026, the latest we found, shows 37,711, up 4.4%.²¹
Money: Actual foreign investment fell 9.5% in 2025, to RMB 747.69 billion.²⁰ It fell 6.2% in January to July 2026, to RMB 438.33 billion.²¹
Profits: In the 2026 European Chamber survey, 17% of respondents were optimistic about profits over two years, up 5 points from 2025’s low.¹⁴
Difficulty: The same survey has 68% saying business got harder in 2025.²²
Competition: In that survey, 48% said Chinese firms in their industry are more innovative than European ones. Only 24% said the reverse.¹⁴

Read the survey with care. It only covers firms already in China, so it says nothing about those that left or never came.

We also found no reliable failure rate of any kind, so be wary of anyone quoting one.

Is your sector open to foreign companies?

Check this before anything else. The foreign investment negative list sets out where foreign ownership is capped or banned, and authorities won’t register an investment that breaches it.³

The 2024 edition has 29 measures, in force since November 1, 2024.³⁴ All manufacturing restrictions are gone.⁴ Several of the remaining ones touch services that smaller firms sell.

Sector	Rule in the 2024 list	Item ³
Value-added telecoms	Foreign share capped at 50%, except e-commerce, domestic multiparty, store-and-forward and call centers	12
Online news, publishing, audiovisual, internet culture (not music), public information posting	Banned, except what China’s WTO commitments opened	13
Chinese legal affairs	Banned, apart from information on the Chinese legal environment. No partner role in Chinese law firms	14
Market research	Joint venture only	15
Social surveys	Banned	16
Preschool, high school, university	Cooperative schools only, Chinese-led	20
Compulsory and religious education	Banned	21
Medical institutions	Joint venture only	22
News, publishing, broadcasting, film production	Banned	23 to 27

Pilots can go further than this table. The list lets free trade zones and similar areas offer better terms (note 9).

Telecoms: A 2024 pilot lifted the ownership cap for selected value-added services in four areas, not for online news, publishing or audiovisual.²⁴
Hospitals: Another allows wholly foreign-owned hospitals in nine regions, with Chinese medicine hospitals excluded.²⁵

Both carry conditions, and we found nothing on them after early 2025.

Not being on the list doesn’t mean you’re free to go. Its own notes say so.

Licenses still apply. Approval, qualification and security rules outside the list stay in force (note 8).
A second list exists. The market access list binds domestic and foreign investors alike (note 1).
Partnerships don’t get around it. A foreign-invested partnership can’t be used in a field with equity limits (note 4).
Individuals are excluded. Foreign investors can’t run a sole proprietorship or individual business (note 2).

Be careful with the edition, too. China Briefing cited the 2024 edition in April 2026.⁵ Global Law Experts wrote that same month of a “2026” list effective February 1, without an edition number.¹⁷

That date matches a different text, the 2025 encouraged catalogue, which took effect on February 1, 2026.¹⁸ A separate Global Law Experts guide, updated in May 2026, treats the 2024 edition as current.²³ We found no 2025 or 2026 negative list, which doesn’t prove none exists.

Which entry route fits your business?

Choose by what you need to do inside China, not by the name of the structure. This table compares the routes on what they let you do and what it takes to stop.

Route	Sell in China?	Staff in China	Chinese invoices	Time to open	Time to leave
Contract from abroad	Yes, cross-border ²	No	No	A signed contract	Contract terms
Distributor	Through the distributor ¹	No	Theirs, not yours	A signed contract	Contract terms
Cross-border e-commerce	Goods on the Positive List ¹	No	No	Set by the platform	Set by the platform
Employer of record	Doesn’t add sales rights	Via a provider, unsettled ¹⁰¹¹	No	Not in our sources	Not in our sources
Representative office	No ⁸	Via an agency ¹	No	2 to 3 months ¹	6 to 12 months ⁷
WFOE	Yes, within its scope ¹	Yes ¹	Yes ¹⁵	3 to 6 months ⁵, or 8 to 12 weeks for a service firm ⁹	6 to 14 months ⁷
Joint venture	Yes, within its scope ¹	Yes ¹	Yes ¹	Partner talks, then registration	Depends on the partner agreement

Those timings are one or two firms’ estimates, and many of them sell these services. Treat them as orders of magnitude.

Verdict

Need sales but no people? Stay at the first three rows. Need people and revenue in China? Look at the last two. The rows in between rarely solve a sales problem.

When is a representative office worth it?

When you need eyes on the ground and no revenue there. It’s a listening post, and it’s often mistaken for a cheap sales office. The rules are specific.

Purpose: Market research, display, promotion, and liaison for sales or sourcing (art. 14).⁸
Profit: Profit-making activity is banned (art. 13). Gains are confiscated, the fine runs from RMB 50,000 to 500,000, and serious cases can lose registration (art. 35).⁸
Representatives: One chief representative and 1 to 3 representatives (art. 11).⁸
Parent: Must show over 2 years of lawful operation (art. 23).⁸
Lease: At least one year in a commercial building, per the EU SME Centre.¹
Tax: Generally taxed on its expenses, so costs can bite.¹

The EU SME Centre’s example is a sourcing office that handles suppliers, not sales.¹ Sourcing liaison is one of the uses the rules allow.

Is an employer of record a shortcut?

Only for something small and short. An employer of record hires staff for you, so you have people in China without an entity.

The EU SME Centre presents it as fast and flexible.¹ Lawyers are more careful.

Shaohe Law Firm sees it fitting short, project-based work of limited scale.¹⁰ It warns you could be treated as the employer if you direct staff yourself, though no directly comparable precedent exists.¹⁰

Pinsent Masons flagged illegal office and tax presence risks in 2022, especially for sales and marketing staff.¹¹ That’s the work most market entrants want done.

Our guide to working without a Chinese company covers this in detail.

WFOE or joint venture?

Start from the WFOE, and use a joint venture when the list requires one or a partner brings what you can’t get otherwise.

China Briefing’s view in 2026 is that the WFOE is still a strong default where full foreign ownership is allowed.⁶

It also lists when a WFOE fits badly: if you want to test the market, deploy money in stages, or get out quickly.⁶ If that sounds like you, stay at stage 2 for now.

Joint ventures have the opposite problem. The EU SME Centre says many plans fail during negotiation, over ownership, control and governance.¹

Harris Sliwoski generally discourages forming one just to sell products, since disputes can be harder to resolve than under a distribution agreement.²

Published figures on cost are inconsistent, and that’s worth seeing before you budget.

Item	EU SME Centre, 2025 ¹	MSA Asia, April 2026 ⁹
Setup	CNY 40,000 to 160,000, WFOE or JV	USD 8,500 to 12,000 for a service firm
Capital, consulting or service firm	CNY 100,000 to 200,000	USD 100,000 to 500,000
Capital, trading firm	CNY 300,000 to 500,000	USD 200,000 to 1,000,000
Annual compliance, 10 people	Not given	USD 22,000 to 35,000

MSA Asia contributed to the EU SME report, and its capital ranges still differ by far more than currency explains. Neither is a legal requirement.

There’s no legal minimum outside sectors such as banking and insurance.⁵ Ask two advisers what your local authority expects.

Three facts matter more than the setup fee:

Capital is a commitment. Shareholders must pay in what they subscribe within five years.⁵⁶
Cash doesn’t leave freely. Dividends need audited profits, tax clearance and foreign exchange compliance.⁶
Tax applies on the way. The standard corporate rate is 25%, and dividend withholding is generally 10% before treaties.⁶

For the detail, read do you need a WFOE?

Free check

Is your website visible on Baidu?

Enter your website. We check Baidu, access from China and how your site is set up, then email you the report.

What does it take to leave?

Months of work, and the entry guides we read barely mention it. Winding up is a formal procedure that runs through several authorities.⁶

	WFOE ⁷	Representative office ⁷
Typical duration	6 to 14 months	6 months to 1 year
Longest step	Tax clearance, 4 to 8 months	Tax audit, around 6 months
Audit	Liquidation audit if over 1 year old	CPA audit of the last 3 years
Staff	Statutory severance first	Handled by the agency, cost on you
Filing	Liquidation committee within 15 days of dissolution	Apply within 60 days of the trigger ⁸

China Briefing’s guide is undated, though it cites the 2023 Company Law. A simplified track exists for firms that qualify. Creditor notice drops from 45 to 20 days, and a lighter tax process is tied to a clean tax record,⁷ so don’t plan on it.

Walking away isn’t a safe option. China Briefing lists civil liability, travel restrictions on the legal representative and asset freezes among the consequences of skipping procedure.⁷

What should you do first?

Start with the steps that cost little and take the longest. The order below is our reasoning from the sources, not a tested method, and it carries no promise of results.

Read the negative list against what you plan to do, as above.
File your trademark now. Harris Sliwoski calls China “predominantly” first-to-file,² and the EU SME Centre says registration typically takes 8 to 12 months.¹ Register English and Chinese versions.¹ A revised Trademark Law takes effect on January 1, 2027,²⁶ so use a local trademark agent.
Keep the mark in your own name. The US guide warns against letting Chinese partners register your IP.¹²
Test demand from abroad. Use Baidu keyword research to see whether people search for what you sell.
Publish a small set of Chinese pages. A site hosted abroad can do this with no entity, as our ICP guide explains.
Pick one region or segment. The US guide suggests a regional approach, and says lower-tier cities may have fewer foreign competitors.¹²
Choose a first channel. See Baidu, WeChat or Xiaohongshu: which channel first?

How do you vet a Chinese partner?

Check the company, then what it can really do for you. The US guide says partners tend to specialize by region or sector, so strength in one place may not carry over.¹²

Paperwork: Verify business licenses, reputation, financial health and legal history.¹
Reach: Visit its facilities,¹ then ask which cities and channels it truly covers.
Conflicts: Ask which other brands it carries.¹
Links: Understand its ties to state-owned or large private firms.¹²
IP record: Check how it has treated others’ rights.¹²
Protection: Use non-disclosure, non-use and non-circumvention agreements.¹³

What are the main risks?

Six come up across the sources. Each has a first response you can act on before you spend much.

Risk	How it shows up	First response
Lost brand	Someone else files your mark ¹	File early, in both languages
Rule changes	Licenses and foreign investment rules shift ¹¹³	Name who monitors your sector
Partner dependency	A distributor sets up the online stores you later have to take back ¹	Keep key assets in your own name
Trapped capital	Money stuck in a company you can’t easily wind up ⁶	Fund in stages, plan the exit
Local competition	Saturated markets, sudden new rivals ¹³	Test price and position first
Politics and trade	Tariffs, export controls, entity lists ¹¹²	Check controls at home too

Harris Sliwoski’s point on scale applies throughout: a small company’s smaller revenue base amplifies the effect of a financial mistake.¹³

Is Hong Kong a shortcut?

Not to the mainland. A Hong Kong company is a useful base, yet the EU SME Centre says many mainland industries still require a separate legal presence for direct activity such as hiring, RMB invoicing or selling.¹

Its CEPA trade deal has limits too: at least three years of registration, and benefits only for Hong Kong-origin goods and services.¹

Hosting is a separate decision, covered in Hong Kong or mainland hosting.

When do you move up a stage?

When a specific need can’t be met where you are. Harris Sliwoski names local staff, large inventory operations, Chinese invoicing and ongoing services others can’t efficiently provide.²

What you notice	What it points to
Buyers insist on a fapiao	A Chinese entity in the chain. See invoicing Chinese clients
You need people directing work in China	A company, or a short project through a provider
You hold real stock in China	A company, or a stronger distributor
A distributor has stopped growing	A new contract first, a company second
You want a mainland-hosted site	An ICP, which needs a Chinese entity. See our ICP guide
You only want more Chinese enquiries	Nothing new legally. Work on your pages

The EU SME Centre gives a case of this: a UK tea brand spent three years with a distributor, then formed a WFOE when the distributor’s capacity limited it.¹

The last row is the one to keep in mind. If being found is your real gap, a new structure won’t close it.

The bottom line

If you remember one thing, make it this: enter in stages, because every step up is harder to reverse.

Check your sector, file your mark and test demand first. Form a company when a concrete need requires it, with a local adviser beside you and the exit already costed.

How Index in China can help

We cover one part of stage 1 and stage 2: being found. We translate your site into Simplified Chinese with a human reviewer, work on getting it indexed on Chinese search engines and send a monthly report on Chinese traffic.

We don’t advise on structures, tax or licenses, and we don’t promise rankings or traffic. See what we do, or book a 30-minute call.

Book a 30-minute call

Common questions

Can a small company enter the Chinese market?

Yes, if it keeps the commitment small. Harris Sliwoski points out that a failed China investment hits a small firm harder than a large one, though small firms can usually pivot faster.¹³ That favors routes you can stop, such as exporting or a distributor, before anything that needs a company and a payroll.

Do I need a Chinese partner to enter China?

Usually not by law, unless your sector is limited to joint ventures. You may still want one commercially. The US government guide calls a trusted agent, distributor or partner often critical for success,¹² yet that's a commercial judgment, not a legal rule. A partner is a dependency too, so keep your trademark and customer data in your own name.

What is the most common way to enter China?

We found no official breakdown. The EU SME Centre calls agents and distributors one of the most common routes for European SMEs,¹ without giving a percentage. Some advisers quote percentages for each route, but we couldn't trace one to a public dataset, so don't choose a route because it sounds popular.

How long does it take to enter the Chinese market?

No reliable figure exists, because entry isn't one event. Marketing to China mentions 6 to 12 months without a source.¹⁵ Each piece runs on its own clock, from trademark filing to company setup, and regulated products add their own approvals. Build your plan from the separate timelines in this guide, and treat any single total as a guess.

Is a free trade zone an easier way in?

It can help, within limits. The EU SME Centre says bonded zones inside pilot free trade zones let goods wait without immediate customs duty, which is charged if they enter the domestic market.¹ The negative list also allows better terms in such zones.³ Check what your exact zone offers, because it doesn't remove sector licensing.