What is a WOFE?
A wholly foreign-owned enterprise (WFOE) is a limited liability company in China which is 100% owned by a foreign entity (or entities). A WFOE requires registered capital and its liability is limited to its equity. It can generate income, pay tax in China, and its profit can be repatriated back to the investor’s home country. Any limited liability enterprise in China which is 100% owned by a foreign company or individual (or owned by multiple foreign companies or individuals) can be referred to as a WFOE.
In order to register as a wholly foreign-owned enterprise, you must provide:
1. 2 copies of your company’s certificate of incorporation, articles of formation or equivalent document certified by a Chinese embassy or Chinese consulate overseas*
2. 2 copies of the investor’s bank reference letter declaring the investor to be in good standing with the bank
3. Copies of the passports of the parent company’s director, the legal representative that will submit the paperwork, and the Chinese company’s supervisor
4. 6 copies of the Chinese company supervisor’s resume
5. 6 photos (2×2 inch) and resume of Chinese legal representative
6. Certificate of registered capital, business scope document, and eight proposed Chinese names for the company
7. Office address in China
8. 2 copies of the leasing contract
9. 2 copies of the certificate of real estate ownership
10. 2 copies of the landlord’s identification
11. 4 copies of authorization
12. Documentation that gives the China company’s supervisor the authority to; sign documents on behalf of the parent company; lease office space; and deal with any administrative tasks required to establish the China company
13. If you’re setting up a trading WFOE: the most recent audit report copy from the parent company provided by a certified public accountant (CPA) and customs HS code for the proposed Import/Export products in China.
*For individual investors, two copies of the investor’s passport certified by the Chinese embassy or consulate
The first step towards establishing a WFOE in China is to register the company name with the State Administration of Industry and Commerce (SAIC). Next, the WFOE is required to obtain a certificate of approval from the Ministry of Commerce or Foreign Economical Cooperation Bureau (MOFEC). Once received, a business license application can be submitted to the SAIC before the Public Security Bureau (PSB) reviews the documentation. The next step is the approval of an organization code license from the Technical Supervision Bureau (TSB) and a tax certificate from the Taxation Bureau. From here, the WFOE must register with the State Administration of Foreign Exchange (SAFE). Once approved, a foreign currency and RMB bank account can be established and the investor capital from an overseas bank account transferred into it. This is required to apply for a capital verification report from a certified public accountant. Once the report is received, the WFOE must apply for a permanent business license from the SAIC before the final two steps which involve registering a financial certificate and a statistics license.