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Incorporation in China

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Why Should You
Incorporate an WFOE in China? 


  • Formally carry out your business in China
  • Simple registration process
  • No registered capital required
  • Protected by China Intellectual Property Law
  • Able to purchase property in China
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What is the process for incorporating
a WFOE?


  • Company name approval
  • Prepare legal documents
  • Obtain registered office address
  • Apply for business license
  • Register for taxes
  • Opening a corporate bank account
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What is the minimum requirements to register a WFOE?


  • At least 3 Board of Directors or 1 Executive Director
  • 1 General Manager
  • 1 Legal Representative acting as liaison between the WFOE and the Chinese government
  • 1 Supervisor to ensure legal compliance 

What Can FastLane Do for You?

Company Incorporation

Being Your Company Secretary

Provision of Registered Office Address

Bank Account Opening Assistance

Monthly Accounting and Tax Filing

Work Visa Application and Renewal

Incubation / Acceleration Matching Services

Advise on Policy/Government Incentive Applications

Ready to get started?

FAQs

What is WFOE?


Wholly Foreign-Owned Enterprise (“WFOE”) is the most favoured investment vehicle for non-Chinese enterprises. Pursuant to Chinese corporate laws, WFOE’s are the China-based business entity designated for non-Chinese enterprises to establish their limited liability company in China. Although there are multiple company structures available to non-Chinese enterprises, WFOE’s are the most favoured investment vehicle.
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What is WFOE?


Wholly Foreign-Owned Enterprise (“WFOE”) is the most favoured investment vehicle for non-Chinese enterprises. Pursuant to Chinese corporate laws, WFOE’s are the China-based business entity designated for non-Chinese enterprises to establish their limited liability company in China. Although there are multiple company structures available to non-Chinese enterprises, WFOE’s are the most favoured investment vehicle.
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What are the advantages to incorporating a WFOE?


WFOE’s maintain several advantages which make it the preferred investment vehicle for non-Chinese enterprises. Firstly, as WFOE’s are entirely foreign owned and managed, there is no need to locate a Chinese partner to assist you with your business operations as foreign investors have 100% control over the equity of their WFOE. Firms looking to utilize their WFOE to aid in their expansion into China will find that this business structure will allow a firm to employ both foreigners and local Chinese directly without having any limitation on the number of foreigners employed. For international businesses, perhaps one of the greatest benefits is that WFOE’s allow all profits made in China to be repatriated to the parent company as dividends.

 

In China, many local businesses will request for the other party to settle invoices in RMB for “fapiao” purposes. WFOE’s, being recognized Chinese companies, are able to open company bank accounts which may handle such matters. All in all, WFOE’s allow greater flexibility and efficiency when operating in China.

Consult FastLane now to see start your business in China! 
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What are the disadvantages to incorporating a WFOE?


The incorporation process for a WFOE is a lengthy process and can take several months to complete. In addition, an applicant must receive a series of authorizations from various Chinese regulatory bodies such as the Ministry of Commerce and the State Administration for Industry & Commerce.

What is the WFOE incorporation process?


Very briefly, the WOFE incorporation process is as follows:

  1. Name Approval
  2. Obtain Registered Office Address
  3. Apply for Business License
  4. Obtain full set of Company Seals (WOFE will be able to operate business normally upon obtainment of Company Seals)
  5. Open Company bank account

The above steps are the absolute minimum steps required to open up a WOFE. Upon completion of the above steps, your WOFE will be able to operate normally. However, to the extent that a WOFE engages in industries which requires a license, the WOFE may need to obtain further licenses and register with the relevant authorities.

 

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What is the WFOE incorporation process?


Very briefly, the WOFE incorporation process is as follows:

  1. Name Approval
  2. Obtain Registered Office Address
  3. Apply for Business License
  4. Obtain full set of Company Seals (WOFE will be able to operate business normally upon obtainment of Company Seals)
  5. Open Company bank account

The above steps are the absolute minimum steps required to open up a WOFE. Upon completion of the above steps, your WOFE will be able to operate normally. However, to the extent that a WOFE engages in industries which requires a license, the WOFE may need to obtain further licenses and register with the relevant authorities.

 

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What are the minimum requirements to open a WFOE?


According to Chinese company law, all WFOE’s should have individuals who can take on the roles of General Manager, Supervisor and Legal Representative.

 

General Managers are responsible for overseeing the day-to-day operations of the WFOE. Their specific responsibilities will be outlined in the WFOE’s Articles of Association.

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Supervisors are responsible for overseeing the performance of the company’s duties by its directors as well as its senior management. In other words, their primary role is to ensure the smooth and legal operations of the WFOE.

 

Legal Representatives are the focal management figure of the WFOE and are responsible for the WFOE’s compliance with all relevant laws. As the Legal Representative’s name appears on the WFOE’s business license, they are seen as being responsible for WFOE and its operations in the eyes of the Chinese government.

 

Chinese Company Law does not impose any restrictions on the nationality of the legal representative.

 

What annual maintenance must I consider for a WFOE?


 

Upon successful incorporation of a WFOE, it is immediately required to comply with various monthly, quarterly, and annual filing and reporting requirements. Such requirements include, monthly tax filing, annual audit reports (which has to be issued and signed by a local CPA firm) among others.

 

To the extent that annual compliance obligations are not met, the WFOE may be subject to penalties or can find itself at the risk of getting their business license suspended.

 

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What annual maintenance must I consider for a WFOE?


 

Upon successful incorporation of a WFOE, it is immediately required to comply with various monthly, quarterly, and annual filing and reporting requirements. Such requirements include, monthly tax filing, annual audit reports (which has to be issued and signed by a local CPA firm) among others.

 

To the extent that annual compliance obligations are not met, the WFOE may be subject to penalties or can find itself at the risk of getting their business license suspended.

 

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People seem to set up a company in HK and use this entity to hold their Chinese WFOE. What are the advantages of a Hong Kong holding company?


 

Chinese Company Law has a reputation of being complicated and rigid. As such, foreign investors will commonly utilize a Hong Kong holding company between their ultimate holding company in their home country and their WFOE in China.

 

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One such benefit of utilizing a Hong Kong holding company is that the profit repatriation process becomes more economical. Companies who are operating in multiple jurisdictions can utilize the various double taxation treaties concluded by Hong Kong and its various co-signatories to minimize potential tax liabilities commonly incurred during repatriation of profits.

 

In addition, Hong Kong offers a good option to exit from your investment in a Chinese WFOE. As all equity transfers of companies in China require approval from the Chinese authorities, the process can be considered comparatively inefficient. Aspects of the equity transfer such as the price, condition and timeline of the payment can be challenged. In comparison, Hong Kong companies are not required to obtain approval for the transfer of shares.

What else do I need to consider?


 

During the incorporation process, careful consideration should be made to your WFOE’s name and its business scope.

 

A WFOE’s name must be in Chinese and include several details about the company. These details include its business name, principal business activity, geographic region of incorporation and company type. The most common company type is 有限公司 which translates to “limited company”.

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What else do I need to consider?


 

During the incorporation process, careful consideration should be made to your WFOE’s name and its business scope.

 

A WFOE’s name must be in Chinese and include several details about the company. These details include its business name, principal business activity, geographic region of incorporation and company type. The most common company type is 有限公司 which translates to “limited company”.

The Chinese government must approve the WFOE name as certain words, such as ‘international’ require special approval to use. In addition, your name cannot include any words which may be considered misleading to customers.

 

When drafting your WFOE’s business scope, careful attention should be given to defining what business operations your WFOE will perform. The Chinese government maintains the right to prohibit or restrict your business activities if your business scope does not align with Chinese laws and regulations. To avoid any unnecessary complications upon the commencement of your business operations, make sure that your business scope aligns with your long-term goals of your company.

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The Chinese government must approve the WFOE name as certain words, such as ‘international’ require special approval to use. In addition, your name cannot include any words which may be considered misleading to customers.

 

When drafting your WFOE’s business scope, careful attention should be given to defining what business operations your WFOE will perform. The Chinese government maintains the right to prohibit or restrict your business activities if your business scope does not align with Chinese laws and regulations. To avoid any unnecessary complications upon the commencement of your business operations, make sure that your business scope aligns with your long-term goals of your company.

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