Every Turkish company that starts selling regularly to China or sourcing systematically from China eventually faces the same question: should we set up a presence in China? If so, should it be a company or a representative office, or is working with a local distributor enough? The decision directly affects cost, control, risk and speed of growth, and it is not always easy to change later. In this article we take a practical look at whether to set up a company, a representative office or work with a distributor in China: we explain what each model is for, what it does and does not allow you to do, which stage of company it suits and which criteria to consider when deciding. We will also show that these models are often not alternatives to each other but successive stages of a growth journey.
Company, representative office or distributor in China? Clarify your goal first
The first step in choosing the right model is to define clearly what you want to do in China. Is your goal to follow suppliers closely and strengthen quality control while buying from China? To sell your Turkish products in China and issue invoices? To get to know the market, look for partners and promote your brand? Or to manufacture in China, employ staff and make a long-term investment? Each of these questions points to a different structure. For example, setting up a full company just for market research and liaison may be an unnecessary burden, while a representative office falls short for a firm that wants to sell directly in China.
Besides your goal, you also need to assess your resources realistically. Setting up a presence in China brings ongoing obligations such as office rent, staff, accounting, tax filings and annual reports. Since the scope and cost of these obligations vary by city, type of entity and current regulations, exact figures should be confirmed with local specialists at the planning stage. At Yeni İpekyolu we present Turkish companies with a comparison of the options at this decision stage and determine together the route that best fits their business plan.
A representative office in China: what can and can't it do?
A representative office (外国企业常驻代表机构, or 代表处 for short) is a foreign company's liaison unit in China and has no separate legal personality; legally it is an extension of the parent company in Turkey. A representative office is generally used for activities such as market research, product promotion, liaison with business partners, supplier follow-up and coordination on behalf of the parent company. For Turkish companies buying regularly and in high volumes from China, it can be a meaningful structure for following suppliers on site and coordinating sample and quality processes. At this stage, filing your brand for registration in China is also a common step to take whatever the decision.
The main limitation of a representative office is that it cannot carry out direct profit-making commercial activity: it cannot sign sales contracts in its own name, issue invoices to customers or earn income in China on behalf of the parent company. Staff are also usually hired through authorised human resources service companies. Tax obligations may arise based on the office's expenses; the current practice should be confirmed with a tax adviser. In short, a representative office suits companies that say “we want eyes and ears in China”, but is generally not sufficient for those that say “we want to sell in China”.
- Suitable: market research and liaison
- Suitable: supplier follow-up and quality coordination
- Suitable: brand promotion and fair coordination
- Not suitable: sales, invoicing and earning income
Setting up a foreign-invested company in China: full control, full responsibility
If you want to sell, issue invoices, hire staff directly, import and export or run production in China, the most comprehensive option is to set up a foreign-invested company. Long known as a “WFOE” (wholly foreign-owned enterprise), this structure is today generally established as a limited liability company under China's Foreign Investment Law. Owned through your Turkish parent company or a holding structure, this company is an independent legal entity in China and can sign contracts, open bank accounts and earn income in its own name.
The control that comes with setting up a company also brings responsibilities that require continuity. Processes such as defining the business scope correctly, setting registered capital in line with the business plan, the office address, bank account and tax registration, monthly and annual filings, accounting and, where required, audits need to be managed regularly. In addition, some sectors may be restricted or prohibited under China's foreign investment “negative list”; your activity's status under this list should be checked before formation. Since formation time and cost vary by city and business scope, it is important to confirm current information at the planning stage.
Working with a distributor in China: a fast start with limited control
Working with a distributor or importer partner in China is the fastest, lowest-investment way to sell Turkish products in China. The distributor handles import procedures, customs, Chinese labelling and registration requirements, warehousing, sales channels and collections through its own structure. You export from Turkey and do not deal with the obligations of setting up a presence in China. For companies that want to test the market, see initial demand and benefit from the strength of a local network, this model is often the most sensible start.
The price of this model is control. Pricing, brand image, customer data and market positioning are largely in the distributor's hands. The distribution agreement must therefore be drafted very carefully: territory and scope of exclusivity, minimum sales targets, pricing policy, marketing responsibilities, reporting obligations, the term of the agreement and termination conditions should be clearly written. The most critical point is that your brand is registered in China in your name; allowing the distributor to register the trademark can cause serious problems when the relationship ends. Checking the company and its references before choosing a distributor is also essential.
Comparing the three models: which one in which situation?
To simplify the comparison you can ask these questions: do you need to sell and invoice in your own name in China? If so, setting up a company comes into play. Will you only do liaison, supplier follow-up and market research? Then a representative office may be enough. Do you want to sell your products in China but first test the market with low risk? In that case a distributor or cross-border e-commerce is a good start. The balance between control, cost and speed should be set according to your priorities; there is no single “right” answer.
For many Turkish companies the soundest path is to progress in stages. First registering the brand and testing the market through a distributor or cross-border e-commerce, then building a local presence with a representative office or small company as demand settles, and finally setting up your own sales, marketing and logistics team as you grow, keeps risks manageable. A similar logic applies on the sourcing side: first carrying out quality control and production follow-up with external service providers, then positioning your own team in China as volumes grow, is an efficient roadmap.
- Representative office: light operations, no sales, liaison-focused
- Company: full control, sales and invoicing, ongoing obligations
- Distributor: fast start, low investment, limited control
- Cross-border e-commerce: a flexible complement for market testing
What to check before deciding
Whichever model you choose, some steps are a priority in every case. Chief among them are filing your brand and Chinese name for registration in China, checking your business partners against official records and drafting contracts in two languages with clear terms. If you will set up a company or representative office, the parent company's documents in Turkey must go through translation and apostille processes for use in China. Choosing the city where the entity will be located also matters: proximity to production regions may be decisive for a sourcing-focused structure, and proximity to the target customer base for a sales-focused one.
Getting the right advice on tax and legal structure from the start also avoids the cost of corrections later. Matters such as pricing between the parent company and the entity in China, profit repatriation and service agreements should be assessed under the current legislation of both countries. Some companies consider Hong Kong or another intermediate holding structure; whether this is advantageous depends on the company's particular situation and current regulations. Before making a final decision, working with a specialist tax adviser and lawyer in both China and Turkey is therefore the safest route.
Yeni İpekyolu's support for company formation and representative offices in China
Setting up a company in China, opening a representative office or finding the right distributor are processes that each require their own expertise. When you choose the right model, China becomes both a strong sourcing base and a growing sales market for Turkish companies. What matters is to proceed without rushing, with a clear goal and resources, reliable partners and a solid legal foundation. The experience you gain at each stage helps you take the next step more confidently. The foundation you lay correctly today gives you flexibility and confidence tomorrow as you grow in China.
At Yeni İpekyolu, with our Istanbul office and our team and partners in Guangzhou, Shenzhen, Yiwu, Shanghai, Hangzhou and Beijing, we provide Turkish companies with end-to-end support on company formation in China, representative offices, finding distributors and partners, trademark registration and document preparation. We compare the options against your business plan, manage the process together with qualified specialists in China and report on every step in Turkish. Contact us to plan your presence in China together.
Frequently asked questions
Can a representative office make sales in China?
No. A representative office cannot carry out direct profit-making commercial activity, sign sales contracts or issue invoices. Selling generally requires setting up a company or working with a distributor.
Do I need a Chinese partner to set up a company in China?
In many sectors a wholly foreign-owned company can be set up. Some sectors may, however, be restricted under the foreign investment negative list, so your business scope should be checked before formation.
How do I protect my brand when working with a distributor?
Register your brand and Chinese name in your own name before starting to work with a distributor. State clearly in the contract that ownership of the brand stays with you, the conditions of use and what happens when the relationship ends.
Is it possible to move from a representative office to a company?
Yes, many foreign companies start in China with a representative office and set up a company as activities grow. How the transition is made, including closing the existing office and transferring staff, should be planned according to current regulations.
In which city should I set up a company?
It depends on the nature of your activity. Cities near production regions may suit a sourcing-focused structure, and cities with concentrated target customers a sales-focused one; local incentives and practices also vary from city to city.