Wine Trading WFOE

Register a wine trading wholly foreign owned enterprise to sell wine to consumers and retailers in China!

Sell Your Wine in China

In order to export wine to China and sell wine in China to individual consumers and retailers, you will need to register a Trading WFOE (wholly foreign owned enterprise) and acquire the mandatory licenses for this type of business. Wine falls under the food & beverages category for imported goods which require a Food & Beverage import license to bring into the country. This can be obtained through your newly opened company or by a 3rd party responsible for importing the wine to China for you. You will need a Food Distribution License and because wine is alcohol, and you will need a Retail Liquor License to sell to individuals and a Liquor Wholesale License to sell to distributors and businesses.

Import/Export License

Food Distribution License

Retail Liquor License

Wholesale Liquor License

Our Wine Trading WFOE Opening Procedure

01.

15 working days

Company Registration

Your wholly owned foreign enterprise is registered.

  • Registered Address
  • Company Name
  • Business License
  • Company Chops

  • 02.

    15 working days

    Corporate Accounts

    Opening of your corporate bank account & tax accounts.

  • Corporate bank account
  • Social insurance account
  • Housing fund account
  • Tax registration number

  • 03.

    15 working days

    Import License

    Issuance of an import permission if you wish to be the importer of record. You can also opt to import your product through a 3rd party.

  • Import license

  • 04.

    15 working days

    Food Distribution License

    Issuance of a food distribution license in order for your business to operate.

  • Food distribution license

  • 05.

    15 working days

    Liquor Licenses

    Retail & Wholesale liquor licenses.

  • Retail liquor license
  • Wholesale liquor license
  • Warehouse rental

  • 06. Optional

    Ongoing Support

    Monthly tax & accounting reports for compliance.

  • Monthly tax & accounting
  • Invoice issuance
  • Financial Chop
  • Payroll

  • Case Study: VinoBox

    Overview

    VinoBox is a Spanish Wine company who wanted to expand their online wine selling business to China. They reached out to us and we had our first talk in February 2021.

    Approach

    After gathering the required documents from the client, we registered their WFOE in Shanghai in the Free Trade Zone without an import license at the request of VinoBox since their freight forwarder was acting on their behalf as the imported of record. 

    Once their company license was issued and corporate bank account created, we applied for their Food Distribution License which was smooth and without delays. We could not apply for multiple licenses at the same time, so we had to wait until one license was finished to apply for the other licenses. 

    To get the Retail Liquor License the company needed to provide a suitable warehouse. To get the Wholesale Liquor License, the company needed to provide a suitable warehouse and have a physical shop in Shanghai. We provided VinoBox with a rental warehouse which we used to obtain a Retail Liquor License. Great Success.

    Results

    The clients wine trading wholly foreign owned enterprise was successfully registered in the Shanghai Free Trade Zone. This was greatly beneficial as the client was able to stockpile their imported wine in the area without paying import duties until the product was sold and moved out of Pudong. 

    Conclusion

    All in all, setting up the company and acquiring the required licenses took around 3 and a half months from the time the documents for the WFOE registration were received by FDI China.

    Wine Consumption in China varies a lot according to the age group. This can be largely divided into three groups and would provide an insight to wine producers to target a specific group to sell the products… READ MORE

    sell wine in china

    Trading WFOE

    For companies importing into or exporting out of China.

    Trading WFOEs are essentially consulting WFOEs armed with an import/export license and other licenses for specialty products. Trading companies can take advantage of Free Trade zones in Shanghai & Guangdong.

    Contact

    Address

    436 Hengfeng Road, Greentech Tower Suite 2703, Shanghai 200070, China.

    Phone

    +86 21 5211 0026


      Frequently Asked Questions

      A WFOE is short for Wholly Foreign Owned Enterprise. A WFOE is a 100% foreign-owned (individual or corporate) limited liability company able to generate profit, invoice clients and hire local / foreign employees in China.

      Yes, a WFOE can fully carry out business in China in line with its agreed business scope. It can issue local currency invoices to domestic customers, and make profits from its activities.

      Any operating profit made in China can be converted to foreign currency for transfer to an overseas parent company.

      The government will take into account a few factors for work visa issuance such as: how long has the company been registered, how much tax history does the company have and how many local employees does the company have. This does not apply to shareholders of a new company, as these individuals (local or foreign) will always receive a work visa. 

      Although there is now (since changes in 2016) no fixed minimum requirement, in practice most WFOEs will still require capital injection. The planned amount is reviewed by local authorities during application and it makes business / tax sense to get the level right from the start.

      The amount will vary greatly for different types of business – naturally a small consulting company requires much less than a complex manufacturer. As a guide, sufficient funding is needed to cover the WFOE’s financial obligations before the company is self-supporting (often set as 1 year). Note that there is now much more flexibility than in the past regarding the time period over which capital should be injected.

      It is important to set the capital level appropriately during formation. If it is set too low, any additional funding must be taxed as income (further capital injection is possible but there is a very time consuming approval process). Set it too high, and of course funds may be tied up that could be used elsewhere (and these will be hard to release).

      A WFOE registration is the most complete and flexible option for opening a company in China. It has many advantages over a Representative Office or a Joint Venture operation. Here are some of the key advantages we see in WFOE formation.

      Can be formed without a Chinese partner

      A WFOE is independent, able to manage its own operations, funding and business development. Without a parent, it does not need to share profits, strategies or Intellectual Property.

      Can make profits in China

      A WFOE can fully carry out business in China, in line with its agreed business scope. It can issue local currency invoices to domestic customers, and make profits from its activities.

      Able to send funds overseas

      Any operating profit made in China can be converted to foreign currency for transfer to an overseas parent company.

      Able to hire staff directly

      A WFOE can manage its own human resources (without using an agency), and hire staff both locally and from overseas.

      The best option to protect IPR in China

      The WFOE structure provides some level of protection under Chinese law.

      1. Apply for name approval and registration

      The first step in registering a WFOE in China is to choose an compliant name and get it approved.

      The name choice must follow rules set up in Chinese company registration laws. The company name must include the company industry or brand, operating region of the business, and a suffix of “Company Limited.”

      The following will be checked during name approval:

      • Availability of the requested name. This can be checked independently on the SAIC website (http://www.saic.gov.cn/sbjEnglish)
      • Inclusion of restricted words, such as “China”, “State” or “National”
      • Inclusion of foreign characters or symbols
      • Whether the name is confusing or misleading

      Don’t forget the importance of naming strategy and branding. Just as overseas, your company’s name is the first impression of your company. It should clearly reflect the company role and image. Consideration should also be made of the characteristics of the Chinese characters. Many words or characters have similar meaning or sounds which can strongly influence the impact of the chosen name (both positively and negatively!)

      Note that the name registration can be done early whilst you prepare further, and to aid trademark registration. It is not necessary to immediately submit company filing to MOFCOM after the name is approved. Note also that it is common to submit more than one name for consideration.

      1. Rent office space as necessary

      Before submission for WFOE incorporation, it is necessary to have a lease for company space in the city of registration. The contract for this needs to be valid for a year from registration date. It is advisable to include a condition in the leasing contract to cancel the lease in case of registration refusal or difficulties. As with any contract in China, steps should be taken to minimize future problems – such as checking the owner’s details and land rights certificate for the property being leased.

      1. Carry out environmental impact assessment – Only for a manufacturing WFOE

      If registering a manufacturing WFOE, an environmental impact assessment will need to be carried out by a registered agency. This is done in order to obtain an approval certificate from the local environmental protection authority.

      The procedure and required approval varies with the scale of the manufacturing operation and its potential impact, and will include consideration of material used, produced and disposed, machinery to be used, as well as any existing plans for environmental protection.

      1. Online registration via MOFCOM

      The registration process has been significantly simplified in recent years, and now makes use of an online filing submission. This is much faster than the previous methods, but still requires a lot of documentation! It should be noted that there is a somewhat greater burden with online submissions to have all details correct and finalized. The process of “blind submission” does not allow for discussion with authorities during submission.  If rejected, the application will need to be revised and resubmitted.

      1. Apply for a “5 in 1” business license from local AIC

      Following approval from MOFCOM, the application for a business license with the local Administration of Industry and Commerce (AIC) needs to be made. This is another process that has been greatly simplified and quickened in the past couple of years. An application is now made for a so-called “5 in 1” business license, which covers all the major licenses required for a new company. Previously each of these required separate applications and naturally this was much more time consuming.

      Again, this is now an electronic submission, accompanied by significant documentation (see section on documents required). Once submitted the AIC will share documentation with other relevant authorities to issue licenses – a major time improvement!

      The 5 licenses issued by the AIC are:

      • The business license
      • Tax registration certificate
      • Organization code certificate
      • Social security registration certificate
      • Statistical registration certificate

      The company now exists and is licensed to do business in China, and the remaining set-up steps can be considered “post licensing” tasks. We would expect to reach this point in 2-3 months.

      1. Carving chops for the new company

      To Chinese business newcomers, the importance of chops is often a surprise! Every company requires a set of chops, or seals, to be used as representation for signing official documents.  These hold the final say, above individual signatures.

      Chops can be applied for through the Public Security Bureau (PSB) following company set up. Several additional chops are needed for different business areas (e.g. financial, invoice sealing and customs if appropriate). Each will have the company name in Chinese and English if required.

      1. Opening bank accounts

      Once chops are obtained, they can be used to open the WFOEs Chinese bank accounts. A WFOE should have at least two accounts, preferable with the same institution (Chinese or foreign banking institution are equally acceptable depending on company preference).

      • A local currency RMB standard company account. This can be used for payments and receipts in RMB, as well as for company tax payments and day to day operating costs.
      • A separate capital contribution account, designated in foreign currency. This is the official account through which capital can be injected from overseas.
      1. VAT registration

      WFOEs must be registered for VAT payments with the local tax bureau. There are two different categories for VAT registration for all companies – “general” and “small scale” (with low sales volume).  A new WFOE which qualifies for small scale may choose to register under either category.

      In general, a lower VAT rate is paid for companies that qualify as small scale, but there are some potential advantages in registration for general status (such as the ability to deduct input VAT). Discussion of individual situation with a tax expert is advisable here.

      1. Customs and import-exit registration – for trading WFOEs only

      For trading WFOEs involved in import-export there are several additional registrations required, which are not automatic under the AIC business license application. These must be made separately following company incorporation and the exact requirements depend on the company operation area, but will likely include the following:

      • Import-export license
      • Customs registration certificate
      • Registration with Entry-Exit Inspection and Quarantine Bureau (for quality inspection)
      1. Issue contracts and complete necessary registration for employees

      Whilst this is not formally necessary before the company starts trading, it is best at this stage to ensure everything is set up correctly. Formal contracts need to be issued from the new WFOE for all local employees. Also, registration will need to be made for employee tax and social benefits accounts.

      Companies may well already have local employees working for them, often through a previous representative office structure or employed on their behalf by a Chinese agency. The new WFOE can now employ them directly.

      A WFOE requires an executive director or board, as well as one or more separate supervisors who oversee director and company performance. A general manager (who can also be a director) is needed with responsibility for day to day operations. Ratios and requirements for boards are defined and depend on company size.

      A WFOE is the best option to protect your IP rights in China. There is no need to share business information with a partner, and the WFOE structure provides some level of protection under Chinese law.

      A WFOE can manage its own human resources (without using an agency), and hire staff both locally and from overseas.

      A WFOE is independent, able to manage its own operations, funding and business development. Without a parent, it does not need to share profits, strategies or Intellectual Property.

      1. End of zero covid restrictions in China
      2. Using an Employer of Record in China
      3. Registering a company in China
      4. Using a combination of both
      5. Takeaways for 2023