Should You Set Up a Company in China — Or Use a Local Office and

A Cost and Risk Comparison for U.S. and Canadian Businesses

Expanding into China is an exciting opportunity for many North American companies. The market is huge, fast-moving, and full of potential partners and customers. But one question stops many firms in their tracks:

“Should we establish our own company in China, or start with a local office and team?”

It’s a bigger decision than it appears. Opening a legal entity in China (a WFOE) can be expensive, slow, and risky—especially if you are still exploring the market or testing product–market fit. On the other hand, entering without any local presence can leave you blind to opportunities and unable to support customers properly.

Below is a clear comparison to help you decide which model supports your goals.

When a Full Chinese Subsidiary Makes Sense and When it Doesn’t

Setting up a WFOE gives a company full operational control in China. However, many U.S. and Canadian companies underestimate the time, cost, and compliance responsibilities involved.

A typical setup includes legal fees, registration, mandatory accounting staff, office leases, and ongoing reportin. This can quickly reach tens of thousands of dollars before the first dollar of revenue is earned. Add in the need to hire and manage a local team—often without cultural or regulatory experience—and the risk multiplies.

For companies with a long-term strategy, confirmed demand, or high-volume operations, forming a subsidiary can eventually be the right path.

But doing it too early can drain resources and delay real market learning.

Why Many Firms Choose a “Local Office and Team First” Approach

For companies still exploring the Chinese market, a lighter, more flexible entry often works better. Instead of immediately establishing an entity, many choose to begin with:

🔹A local representative office

🔹A dedicated local team for sales, sourcing, or operations

🔹On-the-ground support without needing their own legal entity

This approach allows a company to operate in China, meet clients, visit factories, handle communication in real time, and build partnerships—all without the administrative burden of creating a subsidiary from day one.

For North American companies, this model offers three main advantages:

1. Lower Cost

You avoid upfront entity-registration expenses, HR compliance, and mandatory office leases. Instead, you only invest in what you actually need: a functioning local presence and an experienced team.

2. Faster Go-to-Market

A local team can start operating immediately. You gain real feedback from customers and suppliers without waiting months for paperwork and approvals.

3. Reduced Risk

If your strategy changes or the market signals shift, you can adapt quickly. You aren’t locked into long-term commitments or fixed overhead.

How Huaoffice Helps Companies Enter China Safely and Efficiently

Huaoffice provides a hybrid solution that bridges the gap between “no presence” and “full subsidiary.” Companies gain access to a local office, bilingual professionals, and operational support, all managed by a team that understands both Western business expectations and China’s on-the-ground realities.

This means you can:

🔹Test your market strategy

🔹Build relationships with suppliers

🔹Support Chinese clients

🔹Establish credibility

🔹Operate professionally

🔹Collect real market insights

…before making a long-term commitment.

For many North American businesses, this model serves as both a risk-managed entry point and a stepping stone toward opening their own entity later—if and when the business case is proven.

Which Option Is Right for You?

If your company already has a clear revenue stream in China, stable operations, and a long-term plan, then establishing a subsidiary will eventually give you the most control.

But if you’re still validating the market, building partnerships, or simply want to avoid unnecessary cost and risk, starting with a local office and team is a smarter, safer, and more efficient pathway.

Huaoffice acts as this exact bridge — giving U.S. and Canadian companies a professional local presence without the weight of premature investment.