China WFOE Company Formation

A China WFOE (Wholly Foreign Owned Enterprise) company is a limited liability company wholly owned by foreign investor(s) with full control over management and operation in China.

Pros and Cons of China WFOE Companies

Pros

• With separate legal entity in China;
•  Feasible to carry out all business activities (subject to the business scope stated in business licence);
•  Negotiable for tax incentive with local government;
•  Allow to hire local staff;
•  More flexibility in company strategic management.

Cons

• More complex application process and each step may have profound impact in future development of the company: business scope, financing, tax rates, director board management etc.;
•  Capital injection is required to meet the minimum level for specific industry and in specific territory of China (such as free trade zones and export processing zones). The minimum capital is around USD 140,000;
•  Even though WFOE is limited liability in nature, a legal representative needs to be appointed and take up unlimited liability of the WFOE.

Registered capital may be varied based on the setup location.

China WFOE Document requirements (general reference)

Prepared by client

• Five enterprise’s name (Chinese) to be prepared for new company
• The copies of Business license or certificate of incorporation or Commercial Registration and Brief Introduction of investor
• The company introduction
• The passport copy of the legal representative of the investor
• The resume and four photos (one inch ) for legal representative
• The supervisor’s passport copy
• Lease Agreement for the WFOE to be established. (Copy,The contract must be for not less than one year) and the property right certificate of the owner(copy with the seal). Certifying the contract by the estate bureau depending on the registration location.
• Embassy Certificate : The business license should be certified by Chinese Embassy in investor country.
  HK company : The HK company’s license certified by Chinese Law service (HK) company
• Bank Reference Letter. This letter should be issued by a non-Chinese bank that has business relations with the foreign enterprise with validity of six months.
• All documents in foreign language should be translated into Chinese

Prepared by us

• The appointment letter of the member of board
• The Article of association;
• The Feasibility study report : Drawing by us, signing by investor.
  Please supply the following information:
  •  Business scope & products list
  •  The business plan within three years of new company included Sales Quantity & Sales amount for each product, business mode.
  •  Organization structure and employee’s quantity.
  •  Estimated the total investment value and its assignment, estimated register capital.
• Entrustment Agreement
• The application for registration form made by Administration for Industry & Commerce