REALWorld Law

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

FIE in the PRC typically takes the form of either a Sino-foreign joint venture (JV) or a wholly foreign-owned enterprise (WFOE).

JVs and WFOEs each have their own benefits and disadvantages. Many foreign investors are attracted to the WFOE structure because it allows the foreign party to have complete control over the management of the enterprise, major financial decisions, and the use of intellectual property rights. JVs allow foreign investors new to the PRC to work closely with a local partner that may have significant contacts with the local business community, specific geographic or industry knowledge, and experience with government relations.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Joint Ventures

A JV is an independent legal entity. A JV typically takes the form of a limited liability company. The JV partners contribute registered capital to the JV and, unless otherwise agreed, enjoy rights in proportion to the percentage of its paid-in capital divided by the total paid-in registered capital of such JV. Capital contributions may be in cash or in-kind (eg land use rights, buildings, intangible assets or equipment). It is a legal requirement that the in-kind contributions undergo a valuation so that the parties’ respective equity contributions may be determined. The JV contract must also set out a schedule for contributions of registered capital, which may be in one lump sum or in instalments.

Wholly Foreign-Owned Enterprise

Currently the most frequently used foreign investment vehicle in the PRC is the WFOE. A WFOE typically takes the form of a limited liability company, though other corporate forms. The equity interest in a WFOE is entirely owned by its foreign investor or investors.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Where the total investment amount is at least US$10 million, the registered capital of a real estate foreign invested enterprise must be an amount representing at least 50% of its total investment amount.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Costs vary depending on the complexity of the corporate structure.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

 

Timescales vary greatly depending on the complexity of the corporate structure and the location of the incorporation, but are typically one to two months.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

The management and operations of a FIE are governed by a board of directors (or its sole director) and the managerial staff, who are responsible for the day-to-day operations of the FIE, with the highest authority of the FIE being its shareholder.The managerial staff consists of a general manager in addition to other board-appointed officers, such as a chief financial officer or deputy general manager. It is common in a JV structure that if one party has the right to nominate the general manager, the other party will have the right to nominate the chief financial officer.

 

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Compliance costs vary depending on the complexity of the corporate structure.

Last modified 13 Mar 2025

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

As FIEs all generally have the status of a legal person and so are subject to the same taxes as set out in the Tax Topic for the Peopleʼs Republic of China.

Last modified 13 Mar 2025