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Unveil the Myth of WFOE in China
Oct 24, 2016

Unveil the Myth of WFOE/WOFE in China
WFOE is short for Wholly Foreign Owned Enterprise. It is a limited liability company 100% controlled by foreigner shareholders. It's generally preferred over other types of companies, expect for certain restricted industries. There are three types of WFOE, namely: Manufacturing WFOE, if it manufactures in China; Consultancy WFOE, if it offers consultancy or service; and Trading WFOE (or FICE, Foreign-Investment Commercial Enterprise), if it does trading, wholesale, retail or franchising in China.

The main advantages of establishing a WFOE includes:
Full control of your company, to implement your investment strategy without additional stipulations.
Can carry out business functions like normal Chinese companies, such as being able to issue invoices (Fapiao) to customers in RMB and receive revenues in RMB.
Can repatriate profits back to the home country without prior approval from the State Administration of Foreign Exchange (SAFE). However, repatriation of registered capital is not allowed during the term of business operation.
Can protect its intellectual property.
Full control of human resources.

Key Issues when incorporating a China WOFE
1: Business scope:
The WOFE is only allowed to conduct business within its approved scope of business, which is specified on the business license. If you wish to make amendments to the business scope, you need to file further applications and obtain approval from relevant authorities.
2: Registered and paid up capital
Though there is no minimum registered capital required, RMB 100,000 ~ RMB 500,000 (Approx. USD$15,000- 75,000) is the common range for minimum investment capital to be approved for Consulting, Service and Hi-Tech WFOE registration in China. However, in practice, the authority will usually review your business scope and location on a case-by-case basis. After your WOFE has been approved, you need to inject initial paid-up capital within 3 months, the initial injection could amount to 20% of the registered capital. In addition, the balance should be remitted within 2 years.

In addition, you should always think about which Chinese city to launch your business. Does the local economy foster the business you want to grow? Can recruit and retain the talent necessary for your business operations? Is the local tax system preferable for the business you choose? How to deal with the social security issues for your Chinese and foreign employees? Contact YINGKE for a comprehensive consulting before you choose to incorporate your WFOE in China. YINGKE is a Chinese premier foreign investment service provider, we specialize in China company incorporation services. Our experienced and diverse team offers comprehensive solutions in over 40 cities in China. With our high quality services, you can embark on your investment journey in China with ease.

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