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What Is A Wholly Foreign Owned Enterprise?

As its name suggests, a wholly foreign owned enterprise, also known as a WFOE or WOFE, is a limited liability Chinese company which is invested into with 100% foreign capital and owned by only foreigners.

This company behaves in the same way as any other Chinese company, in that it can trade freely in China, make revenue in CNY, invoice (produce fapiaos) in CNY, can transfer profits back abroad, and can export goods.

Typically a Chinese WFOE will be a subsidiary of a foreign company which is based abroad, but although a Chinese representative of this foreign company, it still operates as a standalone entity within China.

Advantages Of A WFOE in China

A Wholly Foreign Owned Enterprise offers:

Independence to operate in China the way you see fit, without needing to answer to a local business partner.
The ability to trade as a normal company, rather than being simply a local representative.
Invoicing in local currency, CNY, as well as the reception of revenue in CNY as well.
Can transfer profits in USD to the parent company outside of China.
Ability to hire low cost local labour and decide who to hire and when.
Efficiency and agility, as there is little need to get bogged down in politics or red tape.
Ability to protect intellectual property, as it remains private.
All profits belong solely to the WFOE

What Is The Capital Investment Needed For China WFOE Registration?

Capital investment was traditionally required to demonstrate that the WFOE, or WOFE as it is often called, would not run out of money before being able to break even.

In recent amendments to the foreign investment laws, perhaps in a bid to spur more investment by lowering the barrier to entry for foreign firms, the government has since removed the minimum capital investment requirement when incorporating a WFOE in the country.

Companies can now determine how much capital will be required to maintain their operations and must simply ensure that they meet those targets within a period of 30 years. The amount that you commit to will vary depending on the business that you're doing. While it may be more flexible, please note that you will need to commit to registering an appropriate amount of capital upon forming the WFOE (for instance, a factory will require more than a trading company).

How Does Lee & Associates (L&A) WFOE Setup Process Work?

First we will describe the documents needed. Once we have these you can leave the process to L&A

So you can understand what we do on your behalf, we will also describe the different steps that we take in order to finally open your WFOE, and you can download a thorough WFOE checklist as a guide you can keep.

Documents Required For WFOE Setup

Gathering the documentary evidence needed to apply for a WFOE is difficult and time-consuming. L&A will guide you through this every step of the way.
We will require, roughly, the following documents from you in order to open a WFOE (updated May 2020):

Company director/s passport copies
Legal representative's passport copy and details
Company supervisor's passport copy and details
Company office lease rental contract
Chinese name of company (L&A will assist with this)
Business scope (L&A will assist with this)
Copies of overseas company registration documents (required if a company is the foreign investor

WFOE setup takes around just 40 working days

The speed with which the process happens is dependent on 2 things:

Speed and efficiency of collecting and completing the numerous documents required
Good relationship with the relevant government offices

Steps That L& A Includes In Opening Your WFOE

When cooperating with us, here are the tasks that we undertake to make sure that your WFOE is opened quickly, correctly, and legally.
The following is included when opening a WFOE:

Supply all government forms required
Assist in filling them out correctly
Name registration with State Administration of Industry and Commerce (SAIC)
Assist in helping you find suitable business premises within your budget
Apply to open a WFOE at the local Administration for Industry and Commerce for you, be that Shenzhen, Guangzhou or Shanghai
Apply for business license
Apply for the Organisation Code Certificate from the Technical Supervision Bureau (“TSB”)
Assist in registering with the Shenzhen State Tax Bureau (“SSTB”) and Shenzhen Local Tax Bureau (“SLTB”) - or same for Guangzhou
Assist in the creation of your Chinese company seal
Register with local statistics bureau
Help you to open a Chinese corporate bank account (foreign currency and CNY)
Apply for authorization to print or purchase financial invoices (fapiao)
Purchase uniform invoices
Register with the local career service center (for staff hiring)
Register with Social Welfare Insurance Center

Following the successful application, we will return all of the documents and seal to you and then your China WFOE will be open for business. After establishment of the WFOE, all of the above tasks not yet undertaken must be completed within 30 days, and we always endeavour to complete them well before that time.