Learn WFOE Incorporation in China
WFOE means Wholly Foreign-Owned Enterprise, which is an organization that was set up in China, and fully owned by a foreigner. In addition, it is a representation of an autonomous and financial legal entity that has its own lawful obligations.
The WFOE is used the most by foreigners to look for new China markets because it has become one of the top investment destinations. China offers foreign investors a market entry that is highly flexible. Find out more about WFOE Incorporation in China now.
How to Set Up WFOE In China?
It will depend on which sector and the chosen activities you want to do, but it can be done fast. The documents required for submission and the enforced rules are also factors. The WFOE is also a representation of a common business form for foreigners who want to open a business in China.
- Decide on a business name
- Give the owner/s information name,
- Set up the activities
- Appoint the managers which can be beginners to Chinese nationals
- Make a report of the business feasibility
- Deposit the minimum share capital in a Chinese bank
- Apply to get a business license based on the type of activities you will do
- Register for the purpose of taxes
The WFOE registered capital must be completely owned and subscribed by the investor. The WFOE is not including the established branches in China by foreign enterprises as well as foreign economic organizations. The law in China regarding the WFOE does not have a clear definition of the branches. The term must include branch companies engaged in the activities and representatives that do not generally engage in the business activities directly.
The name must have the following:
- The company incorporation’s administrative region-name
- Brand name
- Industry or business that the company operates in
- It must include “Company Limited”
The Chinese legislation gives specific restrictions in what is allowed to be a Company name or which may require special approval.
Obtain an Office Address That is Registered
In the WFOE incorporation, applicants need to provide documentation that states the registered office address where the business is going to operate. Therefore, it must be submitted in the form of a lease contract or property deed.
It must be noted that under the present Chinese laws and regulations, a virtual registered office address cannot be used.
Business License Application
When you receive the WFOE name approval and obtainment of the registered address, the business license must come from the local State Administration for Industry and Commerce (“SAIC”).
Before submitting the document, the following must comply:
- Documentation that evidences their company name approval
- Proof of the registered office address
- Business Scope
- Shareholders identity document
- Proof of the registered capital that must be injected
Other Considerations to Make
The location incorporated in the WFOE is going to have considerable effects on business operations. The different regions in China might have different subsidies and initiatives in supporting start-ups and SMEs. The geographic regions in China might also offer consumer markets for specific industries.
Advantages of a WFOE
There are also a couple of advantages in establishing a WFOE which includes:
- Autonomy and flexibility are given to execute of the methodologies of the parent organization without considering a Chinese partner’s contribution.
- Unrestricted operations are given to this kind of company setup. A WFOE gets the same legal treatment and domestic company’s advantages.
- Capacity to operate a business instead of working as a representative office is given. You can also issue RMB sales to clients and receive wages in RMB.
- Profits that are made in RMB may be remitted to a parent company outside China.
- Intellectual property is protected and technology can be done through forming a WFOE.
- Given total autonomy on human resources and have direct control over your staff actions and you can employ people directly.
- More efficient operations, future development, and management.
- You do not also need to present an investment that has been there for two years.