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Open WFOE in China

Updated on Sunday 20th May 2018

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Open-WOFE-in-China.jpgEntrepreneurs from abroad have a multitude of possibilities for doing business in China’s generous industries. A Wholly Foreign-Owned Enterprise (WFOE) can be the proper option for such business persons, as they can benefit from complete ownership of their company shares in China. The registration process of a WFOE in China has been simplified in recent years to allow foreigners set up their operations in a fast and competitive manner. Instead of dealing with the language barrier in this country and the probable misunderstandings in this sense, we recommend you talk to our company formation agents in China when opening a company, including a WFOE in China.
 

What is a WFOE in China?

 
A WFOE in China is the limited liability company which can be easily established by foreigners interested in having complete ownership in the enterprise, without considering a state-owned part of the shares. The registration process starts with the Trade Register in the chosen city and with the required documents for submission, such as the Articles of Association in accordance with the Company Law in China. Such documents will mention how the WFOE will operate on the Chinese territory and will offer detailed information about:
 
  • •    the owners (their names, their nationality, and country of residence);
  • •    the company name after a verification with the institutions in charge;
  • •    the board of managers and their responsibilities in the company;
  • •    the registered minimum share capital of CNY 30,000 deposited in a bank account;
  • •    the representative agent for the WFOE in China (he/she must have residency in China).

 

Do I need a feasibility report for a WFOE in China?

 
Yes, one should know that the local authorities can verify and establish a feasibility study report before approving the investments you wish to implement in China. If you want to open a company in China and especially a WFOE, we remind that you can benefit from complete support offered by our team of company formation representatives through the local offices in the main cities like Shenzhen, Guangzhou or Beijing, and also in other important metropolises.
 

Can I open a bank account for a WFOE in China?

 
Yes, WFOEs in China need two bank accounts, one for the foreign currency capital, and the second one as the standard RMB bank account. The latter one will be used for the company’s financial operations in China and it will be the only bank account necessary for the imposed tax payments in China. As for the capital sent from abroad, the foreign currency bank account will be used in China.
 

What are the trading WFOE requirements in China?

 
If your WFOE deals with import and export activities in China, a customs registration certificate is necessary for this matter. Besides that, an import-export license is mandatory for changing the foreign currency into the local one. These documents are issued by the Entry-Exit Inspection and Quarantine Bureau in China and by the Ministry of Commerce of the People’s Republic of China.
 

Business license requirements for WFOE in China

 
Before commencing the activities as a WFOE in China, the State Administration of Industry and Commerce in China issues the necessary business licenses. Depending on the operations, one can obtain a certificate from the tax authorities if he or she wants to set up a financial company. As soon as the business license is obtained, the owners of WFOEs in China can apply for work and residence permits, can hire staff and can consider the services offered by an accounting firm.
 

Profit repatriation of a WFOE in China

 
WFOEs in China are subject to permissive legislation and tax structures which allow foreigners to return the profits in the home country. It is good to know that the State Administration of Foreign Exchange in China does not impose particular requirements regarding the profit repatriation or further approvals in this sense. The only condition in this matter is to return the earnings as soon as the business year has ended.
 
If you are interested in additional details about the WFOE registration in China, we invite you to contact our Chinese team of company incorporation specialists at any time.
 
 
 

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