Manufacturing WOFE/Joint Venture Contract Manufacturing Shelter Manufacturing Our Advantage Procurement Marketing Investments	WOFEs & JVs Setting up a manufacturing company in China is a significantly more complex undertaking than setting up a manufacturing company in the US. In the past, it was a virtual requirement to partner with a Chinese company, forming a Joint Venture (JV). This is no longer true for all but a very few industries, and will generally not be an issue for the kinds of enterprises that will interest a small to mid-sized company. In fact, the Chinese government has actually gone on record discouraging JVs, as they so often end up failing within a very short time. The most common vehicle now being used by foreign investors to create a manufacturing company in China is the Wholly Foreign-Owned Enterprise, or WOFE. To learn more about setting up your own manufacturing company in China, Click Here for our "How To" guide to setting up your own Chinese manufacturing company. Advantages of WOFEs and JVs Complete Business Control: you determine Production Cycles and can make quick changes to react to changing conditions Complete Business Control: you control change management. Engineering and Manufacturing changes can be swiftly implemented, reducing scrap and re-work Complete Business Control: you control Quality, enhancing yield and Customer Satisfaction Complete Business Control: you control Intellectual Property and Know-How retaining the competitive edge that you enjoy as a result of these strengths Improved Profitability: you retain the manufacturing margins that you would otherwise pay to a Contract Manufacturer Disadvantages of WOFEs and JVs Significant Investment: Large direct up-front capital investment required; no "toe-in-the-water options Significant Investment: time and management talent is often a problem for smaller companies. You cannot successfully set up an operation in one or two trips. Significant Investment: Government Regulation, Local laws and customs require you to retain lawyers, CPAs, Consultants, other professionals. For example, make a mistake with hiring practices and you could end up with "employees for life". Delay: plan at least 12-18 months before you are actually in production; the long duration between decision and profitability is daunting to all but the most committed. Substantial research required: environmental concerns, utilities, communications, management and workforce availability and retention history. Bottom Line: Investing in your own Chinese manufacturing facility can be highly profitable and successful. Regulation and challenge are much less daunting than they were a few years ago, but are still formidable. The larger your company, the more resources you can commit to the project, and the clearer your need to operate a plant in China, the more likely it is that a WOFE is your best option. Investing in a WOFE is a strategic decision and it requires a do-or-die commitment. Investing in a JV is very similar to investing in a WOFE, but it carries an additional risk. The single biggest reason that most JVs fail within five years is that the two partners do not share common values or objectives. If you see a business opportunity in China, but you are looking for an incremental way to test the waters and to immerse your business slowly, you should consider some combination of Shelter Services, Contract Manufacturing, Registered offices or partnerships with another Western company.

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