Aren't foreign companies not allowed to operate in China without partnering with local companies? I think most (if not all) companies that sell services and digital products (online games, etc) operate this way.
That's not the only possible model. You can also have wholly foreign owned Chinese subsidiaries in the free trade zone if you get the appropriate licenses granted. Forgot the details though, sorry. That setup is apparently relatively "easy" for trade with physical goods, our lawyers told us some years ago, but wanting to do e-commerce without selling physical items meant all sorts of additional licenses had to be sought, and since nobody had done that before, it was unclear whether it would go through.
I remember a hilarious 24h trip to Shanghai because the Chinese law firm had found somebody who was well connected and willing to talk to us. It was somebody's cousin. In the day long meeting, the lawyers were entirely tight lipped and refused to give any legal opinion, merely reading the letter of the law back to us (which is not useful at all in China). The only person who was willing to give any guidance (and preciously little at that) was the cousin.
It was simultaneously very serious, with lots of money at stake, hilarious, exhausting, exhilarating, difficult, full of (cultural, not legal) learnings, and very, very frustrating.
> That setup is apparently relatively "easy" for trade with physical goods, our lawyers told us some years ago, [...]
As someone who is going through this process currently (WFOE), the easiness of the thing was probably exaggerated by your lawyers ;). The most annoying thing is that it is quite hard to get a definitive answer of the kind of licenses one needs, who grants them, and especially the criteria to meet.
