The Key Steps to Incorporate a WFOE in China

5 minute read

A Wholly Foreign Owned Enterprise (WFOE) is a limited liability company established solely by non-Chinese investors and most often by a single investor.

China is an exciting yet difficult market to succeed and navigate in. There are often many regulations in placed with different requirements from local and provincial government.

Multiple foreign investors are permitted (limited to a maximum of 50 investors), though it would typically create more flexibility to consolidate foreign shareholdings in an offshore company.

Foreign Invested Enterprises (FIEs) can be incorporated partially or fully with foreign capital. The foreign investor(s) have complete control to implement the operational, investment and management strategies.  While a WFOE typically has a board of directors, a WFOE with comparatively few investors or small in scale may have one executive director instead of a board of directors.

Although WFOEs can engage in a wide range of sectors even if restrictions still exist, such restrictions are set out in the China’s Foreign Investment Industrial Guidance Catalogue and various industry-specific regulations.

The liberalization of foreign investment increased the popularity of WFOEs among foreign investors, and currently, the WFOE is the most frequently used foreign investment vehicle in China.

Steps to Incorporate a WFOE in China

Step 1

• Online registration with the SAIC (State Administration for Industry and Commerce)  and the MOFCOM (Ministry of Commerce) reporting (between 5-10 days);
• Registration with the SAIC onsite, Issuance of the New Business License (combining the Business License, the organization code certificate, and the tax registration certificate between 5-10 days).

The WFOE now legally exists

Step 2

• Company chops to be made by the Public Security Bureau (between 2-3 days);
• Foreign exchange registration and opening of bank accounts (capital account and current account) in foreign exchange currency and Renminbi (about 10 days depending on the bank policies);
• Registration with Tax Bureau (between 5 days);
• Post-registration procedures (depending on the type of business) such as Customs, Labor Bureau and Social Security Bureau.

Convinced yet?

This guest post is brought to you by our legal partner Leaf. A Shanghai-based firm with extensive expertise in incorporating companies in Mainland China, Fundraising, and M&A inquiries.

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