Chinese Wholly Foreign Owned Enterprise (WFOE / WOFE)
Opening a company in China is the first step to entering this important, growing but often challenging market. And with the proper support and guidance, a WFOE / WOFE registration is not a daunting task!
Things change frequently in China, and staying up to date with the current processes and regulations is critical. FDI China have many years of experience in the changing Chinese business setup scene. We would be happy to assist you with China WFOE / WOFE registration and company incorporation.
What is a WFOE / WOFE?
A WFOE / WOFE (Wholly Foreign Owned Enterprise) is a Chinese registered company that is completely owned by foreign investors (individual or corporate). There is some confusion with the broader term FIE (Foreign Invested Enterprise) which, to clear things up, refers to any type of company with at least 25% foreign investment.
For a foreign company wanting independent operation in China, with the ability to invoice clients and make a profit a WFOE / WOFE is certainly the best option. A WFOE has full control of HR as well and can hire both foreign and local staff.
Can make profits in China
Able to send funds overseas
Able to hire staff directly
Can be formed without a Chinese partner
The best option to protect IPR in China
Long-term licensing (15 to 30 years)
Changing times in China
WFOEs and ROs have for many years been the most popular options for foreign companies looking to get started in China. As China’s economy and demographics change however, the advantages of a WFOE registration are becoming more and more important. The appeal of China is shifting quickly from a profitable base of manufacturing and export to a country with a growing middle class and domestic spending opportunities. With the ability to sell and invoice in China, a WFOE is able to take advantages of these shifts, and we see growing interest in setting up.
The types of WFOE / WOFE being registered are shifting too. In the recent past, the WFOE structure was most popular for manufacturing companies. Nowadays, more and more are being set up in the consulting and management sectors, as well as industries such as high tech and software development.
Our company formation service includes:
Business license
Special certificates (if required)
Bank account
Required chops
Social insurance account
Housing fund account
Office space & business address
Invoicing
Company secretary
Employment transfer to new entity
Which type of entity suits best your business?
WFOE Formation
Number of Employees
Permitted Activities
Post-establishment Requirements
Set-up Time
Market Entry Cost
Representative Office
Number of Employees
Permitted Activities
Post-establishment Requirements
Set-up Time
Market Entry Cost
A simplified WFOE registration process
The Chinese government has proactively updated and changed laws surrounding WFOE / WOFE registration and management as the market has changed. Some of these changes have made it easier for foreign companies to enter China, such as removing WFOE capital requirements. Others have simplified the registration process, with changes such as the introduction of an easier “5 in 1” business license allowing a single application for multiple licenses and permits.
Unfortunately, it’s not all good news for WFOEs! Some changes have brought increased challenges. There are, for example, new regulations requiring identification of the actual people or companies in control of the WFOE. Challenges also continue to arise from the split between central and regional government responsibility. Many application aspects are left to local discretion, and this can vary widely! Good contacts and experience dealing with relevant authorities can be very valuable here.
Our guide to China WFOE registration
We share here some guidance regarding how to register a company in China. FDI China has many years’ experience working in this area and our lawyers are experts in company incorporation. We have seen it all before and understand the challenges.
The short sections below will help inform you whether a WFOE / WOFE registration in China is the right option for your business, and will highlight important considerations before you embark on the process. We also outline the full WFOE / WOFE setup process – to help you see what lies ahead! We will go into more details of key areas in our blog posts, and of course can help you answer any questions you have.
We look forward to hearing from you and working with you during your exciting China journey!