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Which approach can foreign companies use when exporting products to China?

Q&A

When choosing to export products to China, foreign companies can either employ an agent or distributor or set up their own company in China. Small to medium sized companies often rely on agents and distributors since the foreign company itself does not need to be in China. The difference between an agent and a distributor is that agents receive commission by helping the foreign company to find customers in China whereas distributors purchase goods from the foreign company and sell them in China. Some of the main reasons for setting up a foreign entity in China include the ability to hire staff, issue VAT invoices to Chinese customers, set the price or directly take payment and convert it to RMB. Also, it is easier to take control over some matters, such as intellectual property protection, communications, logistics and quality control. There are pros and cons for each approach; therefore it is important for the foreign company to precisely decide which approach to rely on and comply with China’s laws and regulations.



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