The business model does not require its own legal structure
Depending on the type of business model specific to each client, it is not always necessary to create its own legal structure in China. We have seen this with some of our clients who had started with employer of record service to assess the Chinese market and who in practice have chosen to stay in wage portage.
This is the case, for example, when the team in China has a commercial prospecting function and the final order is placed directly with the company in France or Europe. In the past, companies then used the "Representative Office" but this legal structure is less and less used, among other things because of its cost: with no ability to bill, the Representative Office cannot be taxed on any profits and is therefore taxed on these costs (office rental, employee salaries, travel costs, marketing costs, etc.).
Another example is the sourcing office. The employee(s) in charge of sourcing, purchasing and logistics do not need their own legal structure and have been using wage portage in China for several years as well.