Wholly Foreign-Owned Enterprise in China: Part 2

14 Apr 2021

The Establishment Process

 

The process of setting up a WFOE varies as it is dependent on the type of enterprise being established.

WFOEs are mainly classified (but not limited to) the following three types: Consulting WFOE, Manufacturing WFOE and Trading WFOE.

This establishment process can be broken down into two parts: the Pre-Licensing process and Post-Licensing process.

Pre-Licensing Procedure:

 

  1. Name Registration

    • Application and reservation of the selected company name must be made to the State Office of the Administration for Industry and Commerce (SAIC).
  2. Office/Facility Lease

    • It is necessary to have a minimum 12-month lease for company space in the city of registration prior to applying for a WFOE incorporation.
  3. Application for Approval/Record Filing

    • Applicants are expected to go through a simplified record-filing process and require the approval of the Ministry of Commerce (MOFCOM) before obtaining the WFOE  business licence.
  4. Application for Five-in-one Business License

    • This five-in-one business license from the SAIC consists of: Business license; Organisation code; Tax Registration certificate; Social security registration certificate; and Statistical registration certificate.

Post-Licensing Procedure:

 

  1. Carving chops

    • All companies operating in China require a company seal or chop as an official representation of the firm, which can be obtained from the Public Security Bureau (PSB) after successful registration with the SAIC.
  2. Opening 2 banks accounts

    • A WFOE in China needs to have a minimum of two bank accounts: an RMB basic account, and a foreign currency capital contribution account. A WFOE can establish bank accounts with both Chinese and international banks.
  3. Register for Taxes

    • Once granted the business license, companies must then register for taxes at the State and Local Tax Bureau

The information provided serves as a general reference guide and is not strictly advised by Funds Partnership Asia.

 

References:

https://www.china-briefing.com/news/setting-wfoe-china-step-step-guide/

https://www.hongdaservice.com/blog/setting-up-a-wfoe-in-china-the-process-explained

https://www.fdichina.com/blog/china-company-registration/wfoe-wofe/start-your-business-in-china-wfoe-wofe/

http://www.yklaw.us/setting-up-a-wfoe-in-china