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How to set up a WOFE in China

Introduction to set up a wholly foreign owned enterprise (WFOE)

China’s rapidly expanding economy and vast population has made it one of the world’s most attractive markets for business expansion. Today, more and more foreign individuals and entities want to establish company in China. However, how to start? Is there any limitation or requirement on investor? How much will it cost?.....

In this article I would like to introduce the main issues regarding establishing a wholly foreign owned enterprise (WFOE) in China for entrepreneur's information.

Ⅰ. Documents and information required to apply for a WFOE:

1.- If the WFOE is invested by a foreign individual:

  • Proposed company names in Chinese;

  • Passport copy and original passport (if the investor never visit China before, also needs to provide the notarial certificate of his/her passport);

  • Bank confirmation letter issued by the investor's foreign personal bank;

2.- If the WFOE is invested by a foreign company:

  • Proposed company names in Chinese;

  • The notarial certificate of the foreign company's business license;

  • Bank confirmation letter issued by the bank of the investing company;

Note: Please be advised that there is no requirement on the amount in investor’s bank balance.

Ⅱ. Requirement on register capital:

From the new <<company law>> implemented on March 1, 2014, there is no injection time and amount limitation on register capital anymore when setting up a company. It means a company can choose the amount of register capital and injection timeline by itself. The law applies to both local company and foreign company.

Although there is no limitation on the amount of register capital, I still suggest a reasonable capital amount since it will exert positive influence and reduce risk for your business. If you want to know what factors you need to consider when decide a reasonable register capital, please feel free to contact me.

Ⅲ.Registration address:

For setting up a company, you must have a registration address. If you have an office to register your company, you can register in this address. But one issue please be noted that, if you register company on your rented office, better choose an office relative stable, since if you move office, your company needs to apply for address transfer which is very complicated and cost extra.

If you don't have an office when set up company or want to avoid the trouble of changing address, CBA consulting can provide a free registration address for long term use for you.

Ⅳ. How much will it cost to set up a WFOE:

Currently all government fee for setting up a WFOE is exempted;

  • If you don’t have an office to register your WFOE, CBA Consulting can provide you a free registration address, so no address cost;

  • Agency service fee; The fee depends on agent and complexity of the WFOE. But please be advised that below factors will influence your cost:

  1. Which district in Shanghai your WFOE is registered in;
  2. Does your industry require specific permit/license for doing business;For example, for food trading company, it requires “food circulation permit"; Import & export business will need to apply for “import and export right”. If your industry requires specific permit, you will have higher establishing cost than an ordinary company.

Ⅴ. Time taken for registering a WFOE:

-Investor as individual:

For registering the WFOE, there is no requirement on investor, government only needs the investor’s passport or notarial certificate of passport. But when apply work permit and residence permit for investor under his/her WFOE, government requires that the investor should have education background and 2 years working experience which is related to his/her current position under the WFOE.

-Investor as company:

For general industry, there is no requirement or limitation on the investing company.

Ⅶ. Limitation on industry

In China, for foreign investment company, there is forbidden or limitation on certain industry, this is regulated by <<Guide for Foreign Investment Industry>>. Enterprise registered in Polit Free Trade Zone follows the instuction of <<Negative List>>.

Above is the general information regarding establishing a WFOE, if you need to know more detail about above or have any further questions regarding WFOE set up, please feel free to contact me.

Yolanda HE

Yolanda He

M: +86 182 0189 2790

T: +86 21 3166 7780

www.cbaconsulting.cn

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