China Wholly Foreign-Owned Enterprise (WFOE)
- A WFOE is subject to Chinese taxation and can produce revenue from all industry open to foreign investment.
- The minimum share capital needed is between 15,000 and 140,000 USD, depending on the city of registration. Our clients are advised to have a share capital of USD 140,000.
- The required capital before incorporation is 20 percent, the remaining balance must be deposited on a local bank account within 2 years.
- Foreign businesses must undergo an approval process by the authorities which includes business plan approval, incorporation approval and foreign exchange registration approval.
- A feasibility study must be filed, it must contain a basic business plan and budget for the first year of operation. Local authorities must be convinced that the business is viable. Incorporation is not possible unless the project is approved.
- All companies must register for corporate income tax and VAT. If there are employees, registration for Social Security is also required. Once enrolled, social security contributions must be made on a monthly basis. VAT returns are paid each quarter. Provisional payments and corporate returns are made on a quarterly basis. All Chinese companies are required to file financial statements to the local administration.
The China free zone company
- Our customers can choose to create a foreign-owned enterprise and have it registered in one of the many special economic zones as long as the company is export-oriented.
- Requirements vary between zones and include minimum capital, minimum number of jobs created and technology transfers. Some SEZs make available a quick incorporation process, while others follow normal WFOE procedures.
Joint Venture Company (equity joint venture)
- It is also known as a China Equity Joint Venture or the EJV. It can be established by one Chinese joint venture partner and one foreigner (our client).
- It is necessary to open a local corporate bank account, appoint a resident secretary and obtain permission from the local administration.
- They are not permitted to conduct commercial or production-related operations in China.
China branch office
- Foreign companies registered outside the country are not allowed to establish branch offices. However, they are allowed to register branch offices for joint ventures in China or wholly foreign owned companies. They can be used by our customers to register a branch office to bid on local provincial projects.
China representative office
- Foreign companies are permitted to establish representative offices in China. The representative office follows simpler procedures, usually requiring only one approval from the local administration.