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Open a Wholly Foreign-Owned Company in China

Open a Wholly Foreign-Owned Company in China

Updated on Wednesday 10th August 2016

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Open a Wholly Foreign-Owned Company in China.jpgA whole foreign-owned company is a limited liability company, owned and capitalized merely by a foreign entrepreneur. This means that the liability of the company's shareholders is restricted to the assets they bring to the business.The profit obtained by a wholly foreign-owned company in China is returnable abroad. Moreover, as an independent legal entity, a WFOE in China can be used for different commercial purposes.
 
Our lawyers in China can offer you more information about opening this type of company.
 

Registering a WFOE in China

 
It's good to know that the duration of the registration process of a company depends on the wholly foreign-owned enterprise form and the business established purposes.
 
In its pre-registration part, the application process implies name registration. First of all, after deciding for this type of foreign business, an investor in China must choose a suitable name for the company. After it is verified by the Administration of Industry and Commerce, the approval to use it is validated. Secondly, the approval certificate and temporary business license are issued after obtaining specific documentation both from the investor (such as certificate of incorporation, copy of the passport of the investor etc.) and from the new company (business details about the company and employees, articles of association, feasibility report for the estimated cash flow etc).
 
Our law firm in China can give you more details on what documents you should prepare for the application process.
 
As for the post-registration part, after the temporary business license is released, the WFOE in China must make a number of formal registrations at various Chinese governmental entities, in order to obtain personalized authorization for documents on behalf of the newly created company. The opening of a RMB (the official currency of China) account for coping with usual expenses and a foreign capital account as well, in order to receive foreign currency, will be also needed.
 
Investors who need guidance with opening a limited liability company in China can contact our Chinese law firm, who can offer more details about the specific procedures.
 

Other information regarding business registration of WFOE in China 

 
In order to encourage the formation of foreign companies in China, the Shanghai Free Trade Zone has been created in 2013 and as a result, there is no compulsory minimum share capital needed for company incorporation in this zone.
 
An important aspect on WFOE in China is the large number of double tax treaties that China has signed with other countries in order to avoid double taxation. This matter outlines an important advantage for foreign companies that look forward to expand their operations in China through a branch or other business forms.
 
If interested in further information on important legal issues, such as tax system for non-resident companies in China (liable to taxation only on the profit obtained in China), please contact our Chinese lawyers
 

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