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III. Entry to North American and Global Markets (via Michigan) *Chinese business enterprises seeking to enter the U.S. market have several options for establishing their U.S. presence:● Appointing a U.S. company as a sales representative or distributor to market, sell and distribute Chinese-madeproducts for the North American market, or as a licensed manufacturer in North America.● Establishing a wholly-owned subsidiary corporation in the U.S.● Jointly establishing a U.S. company with a business partner to operate as a joint venture.● Contractually entering into a strategic alliance with a U.S. company.● Investing in an existing U.S. company as a silent or active investor.● Acquiring an existing U.S. company.The route by which an investor chooses to invest is commonly driven by factors such as the investor’s available capital, itsexisting know-how with respect to operating in the U.S., strategic business goals and the availability of opportunities.Sales Representatives, Distributors and Licensed ManufacturersSpecific market and other business strategies for Chinese companies include the following:Sales Representatives and Distributors. Chinese and other foreign manufacturers commonly appoint U.S. distributorsor sales representatives in the U.S. to launch the marketing, sale and distribution of their products. The salesrepresentative or distributor should be a local organization with ties to the industry. Michigan law is flexible in regard tocontracting sales representatives and distributors. Appointments may be exclusive or non-exclusive, and the term length,commission rates and other terms may be freely negotiated by the parties.Chinese companies also may consider establishing a subsidiary company in Michigan to support U.S. sales representative anddistributors. A local subsidiary of the Chinese company can participate in marketing activities, as well as directly support sales,maintenance and repair services with local engineering and technological support.Doing business in MichiganLicensed Manufacturing or Assembly. With respect to certain products destined for the North American and global market, Michigan canbe the optimal location from which Chinese companies can produce, manufacture or assemble their products to meet local requirements. Inaddition to its highly-skilled and globally recognized manufacturing and engineering work force, factors such as Michigan’s proximityto North American customers (including major Asian and EU companies doing business in Michigan), its global distribution routesand reputation for state-of-the-art logistics, warehousing, robotics, automation and other manufacturing and production technologiescan also be strategic advantages for global or emerging Chinese companies. A Chinese company may take advantage of Michigan’s value-added production capacity by licensing a Michigan-based manufacturer to produce the Chinese company’s products inexchange for royalties paid to the Chinese company, by outsourcing production in Michigan, or by establishing and licensing awholly-owned subsidiary or joint venture company in Michigan to manufacture products. Some Chinese companies may begin withassembly in Michigan and expand local operations to partial production or full production over time.* This chapter authored by Warner Norcross & Judd LLP ( 华 诺 杰 律 师 事 务 所 ) and Deloitte & Touche USA LLP ( 美 国 德 勤 LLP).31