The Wholly Foreign Owned Enterprise (WFOE)
Pros
- The main advantage for a Wholly Owned Foreign Enterprise is that it is easy to reinforce your own administration to retain comprehensive control.
- Often these enterprises are set in a 'special zone' meaning 'within the Chinese territory but outside the Chinese customs', so an advantage of free from customs duties enjoyed. (For more details of this 'special zone' please visit our Hospitality in our Resource Centre ).
Cons
- Inexperienced investors have to gain knowledge of administration processes in the Chinese market in a hard way.
- Difficult to set up a connection with the local authorities.
Ways of getting around the disadvantages
- Seek for help from consultancy agents, prepare market research and mock up a feasible business plan (for more details of this service please visit our Chinese Market Research service and PR Service )
- Always visit more than one prospective site for your entity, talk to the local government officers to understand the policies and all other concerned issues (for more details of visiting your prospective sites in China, please visit our Hospitality service).
Requirements
The Parent Company
- The minimum authorized capital for a Wholly Foreign Owned Enterprise with intention of trading is US$ 200, 000.
- Although investment can be made by installments and the final installment can be made within 1 year, the entire functions of Trading WOFE are actualized until the total payment amount is made.
- The first installment must be made of no less than 15% of the total amount within 90 days from the day when the business license is issued; the second installments must be made strictly within 3 months. (Please Contact Us to see how we can help you)
- After each installment of investment contribution, a report on the verification of capital needs to be prepared, and submitted to Industry and Commerce for the record.
The Paper Work:
- Bank Statements
- Project Proposal (purpose, business scope, period, investment amount, etc)
- Certificate of Registration and Testimony
- Statement on Products and Technologies
- Duplicate of Confirmation Letter for the three company names for selection
- Report on Feasibility Study
- Memorandum & Articles of Association
- A Named list of the Board and Senior Executives
- List of Equipment to be Provided (if any)
- Passport or Residential Cards of the head of directors
- Lease Agreement or Purchasing Contract of Company Premises
- Certificate of Property from the leaser
- Authorization Documents for the Board and Senior Executives
- Two Photos of the head of directors and Two Photos of Contact Person
- Other Documents (relevant authorities may require additional documents as per specific cases)
The Place of Registration
Almost every province in China has one or more Economical Development Zone (Please refer to our List of China National Economic and Technological Development Zones ). It is suggested to set up WFOE registration in these areas, not only because they can enjoy the free tax exemptions, but also to obtain the maximum support from the local authorities.
Locations should be carefully chosen according to your individual requirements. For example, if you operate a manufacturing factory, it is best to locate your business entity along the supply line and not too far from the shipping ports; if your business involves high technology then professional manpower and economic centres may become your first concern. Please tell us your desired location (province, city or town) for your WFOE, and we can help you to find the Free Trading Zones in that area. If you need help with choosing the right places for your business entity, please feel free to Contact Us .
The Required Fees from the Government for Applying a WFOE
Items |
Government Fee(RMB) |
3 optional company names (in Chinese) are required to be submitted. |
180 |
Submitting the Articles of Association |
|
A copy of Certificate of Registration |
|
Preparation of Appointment of Legal Representative Letter. (Only a Chinese version will be used for application purpose). |
|
Compilation of applicant company's background information, including total volume of trade, operation scopes, annual profit etc. |
|
Passport copy and photos (2) of the director of the parent company and the local legal representative, and their resumes. |
|
Application form to be signed by Chairman of the applicant company. |
|
Filing of form and submission of application for obtaining temporary institution and organization code certificate issued by quality supervision bureau. |
|
Preparation of application letter, submission of application for registration of company with the Municipal of Foreign Trade and Economic Commission (MOFTEC) for approval. |
50 |
Application for the Business License from local Chinese authority
|
0.8% of the authorized capital (i.e. RMB 1,338 if authorized capital is US$ 200, 000.) |
Local Chinese authority Announcement |
4,000 |
IC card from the local Chinese authority |
280 |
Photocopy of business license |
58 |
Approval of the company name from the local Chinese authority |
230 |
License preparation |
80 |
Translation from English to Chinese where necessary |
300 |
Total |
5,178+0.8%*the authorized capital |
Post Registration Fees
Items |
Government Fee(RMB) |
Institution and organization code certificate issued by quality supervision bureau |
263 |
Company seals for business and tax purposes |
350 |
Arrangement of endorsement of the company seal by the public security bureau |
|
RMB bank account and normal bank account at any local bank |
300 |
Application for registration with Bureau for Administration of Foreign Exchange(BAFE), opening foreign currency bank account |
300 |
Registration with local Tax Bureau and state Tax Bureau. |
100 |
Local Statistics Bureau registration |
195 |
Finance Bureau registration |
80 |
Social insurance registration certificate issued by labour authority |
200 |
Capital verification report issued by an authorized Chinese firm |
2,500-3,000(each time) |
Registering certificate for self- declaration units issued by custom (if any) |
180 |
Ranging from RMB 4,468 to 4,968 |
|
Please note that the above fees and items change from time to time, Contact Us for the latest requirements.
Time
The registration of a wholly foreign owned enterprise can take up to 50 working days to obtain business license from the authority from the day all necessary application documents are received. A company is formally incorporated when business license is obtained. A further post-registration process which takes up to 30 working days must be completed in order for it to be fully operational.
Company Maintenance
- The WFOE is inspected annually by several government offices. The objective of the inspection is to investigate whether the enterprise abides to the laws, regulations and the conditions for granting its licenses. Those who failed the inspection may have their business licenses revoked
- Accounting records are required to be kept in Chinese or Chinese and English. Annual audit by a local auditor is required.
Please note that the above information is based on setting up WFOE in Shanghai, in other places in China the requirements and procedures of setting up maybe different. Please contact us with your desired location for more detailed information.
Our Fees
Fees vary according to the location of your Wholly Foreign Owned Enterprise and your requirements. Please feel free to Obtain a Quote with your desired location of your WFOE and your requirements.
To understand how we quote, please see Fees and Quotes .
Please visit our Resource Centre for information on:
A Brief Introduction to the Development of China Development Zones
Lists of China National Economic and Technological Development Zones
Advantages and Characteristics of National Economic and Technological Development Zones
Policies on Foreign Investment
Provision on Guiding Foreign Investment Direction
Tax Policies Concerning Foreign Enterprises in China
Examination and Approval on the Foreign Establishment
Catalogue of Encouraged Foreign Investment Industries