How Do I Decide Which Type of Foreign Entity to Use When Taking My Company Overseas?

Home | China Law Blog | How Do I Decide Which Type of Foreign Entity to Use When Taking My Company Overseas? Table of Contents Toggle In two recent posts, How To Succeed When Taking Your Company Overseas and Do I Always Need to Form a Company in a Foreign Country?, I discussed some common issues companies need to wrestle with when deciding whether and how to take their company overseas. Among those are the pitfalls of having a foreign entity when you do not really need one and today’s topic: navigating the available types of foreign entities. Available types of foreign entities Even if you are not new to the world of international business, a quick search of the types of business entities in any country turns up results that feel familiar and also appropriately foreign. U.S. companies are commonly corporations or LLCs and carry designations like Inc, Corp, and LLC. Although partnerships are less common than 30 years ago, both general and limited partnerships are still also available, though seldom used. Looking abroad, both common law and civil law countries mirror these types of entities with their own domestic nuances. China entities In China, FIEs (foreign-invested entities) are commonly broken down into WFOEs/WOFEs (wholly foreign owned enterprises) and JVs (joint ventures). Which of these are utilized depends on whether there is any Chinese ownership involved in the venture. WFOEs are more commonly used than JVs because foreign companies generally want to retain control of their Chinese business ventures. China JVs can go horribly wrong even where the China JV partner only owns a small minority interest (see China Joint Ventures: This Time We Blame the Victim). Most of the business entity problems our China corporate lawyers deal with stem from poorly planned and executed JVs or badly formed WFOEs. Our China corporate team has recently been helping a couple clients deal with the negative repercussions of utilizing a Chinese representative office when their Chinese operations have far exceeded the legal scope for a representative office. Vietnam entities In Vietnam, single and multiple member LLCs are common, as well as shareholding companies (joint stock companies). General and limited partnerships are also available, but like the U.S. they are less common than LLCs and shareholding companies. Multiple member LLCs are limited to 50 members, where shareholding companies require at least three shareholders and have no maximum. For companies looking to issue corporate bonds or be listed on a Vietnam stock exchange, a shareholding company is the only available entity. Thailand entities Thailand has a variety of partnerships (ordinary, registered ordinary, and limited), as well as private limited companies and public companies. Private limited companies are most common for international companies entering the marketplace. Like many countries, a joint venture entity where a foreign owner owns less than 50% of the ownership interests will not be considered a foreign-owned entity. Indonesia entities Indonesia also has civil and limited partnerships, co-operatives, and limited liability companies (PT PMA). Limited liability companies are most common and can be public or privately owned. Most foreign companies will not immediately jump into forming a publicly owned limited liability company. At least two owners are required at formation. It is also possible to form the right entity in a foreign country but be significantly out of compliance with unusual and unexpected domestic requirements. These include minimum paid-in capital requirements, local representation requirements for a certain number of board directors or other high level positions, such as an Indonesian human resources director, who cannot be a non-Indonesian national. When taking your company international, the details matter. That can be a hard thing for a U.S. based company to remember because most U.S. jurisdictions are exceptionally laissez faire compared to foreign countries. Thorough research and planning can avoid choosing the wrong type of entity and getting your company and key personnel in the wrong column of the foreign government’s checklist. Check Out Our China Law Services Share Twitter Facebook LinkedIn E-mail Comment China Law Blog The China Law Blog focuses on the practical aspects of Chinese law and how it impacts foreign companies that do business in or with China. The goal is to help readers understand what works and what does not work and what businesspeople can do to use the law to their advantage. China Law Blog's aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy. Harris Sliwoski Blog Read more posts [email protected] Read More Basics of China Business Law, Foreign Investment, International Business Related Posts September 15, 2026 Your AI-Drafted China Contract Says It Needs a Lawyer. Listen to It. September 11, 2026 Forensic Accountants in China Business Litigation: How True Numbers Can Tell the Wrong Story September 4, 2026 China NNN Agreement or Trademark Registration? You Usually Need Both September 1, 2026 AI Didn't Replace Lawyers. It Gave Us the 48-Page Contract. August 27, 2026 Do I Need a China NNN Agreement or a China Manufacturing Agreement? Usually Both. August 26, 2026 China’s New Overseas Investment Rules: Can Your Chinese Investor Actually Get the Money Out? August 24, 2026 International IP Protection for Startups: What to Protect and Where August 19, 2026 The Documents Are the International Deal August 19, 2026 China Supplier Fraud in Yiwu: Why We Recommended the Police, Not a Lawsuit August 17, 2026 China Trademark Registration: Why U.S. Companies Need More Than a Filing Agent August 10, 2026 Buying Expensive Equipment from China: Seven Questions to Answer Before You Pay August 7, 2026 DDP Shipping Risks: What Boise Cascade’s Guilty Plea Means for U.S. Buyers August 6, 2026 Protecting Your Artwork Internationally: What Artists Need to Do Before the Work Travels August 5, 2026 Your China Employee Signed the Vacation Policy. You Can Still Lose. July 29, 2026 The RedNote Contract Lesson for Companies Doing Business in China Leave a comment Cancel reply