A China WFOE (Wholly Foreign Owned Enterprise) is a limited liability company wholly owned by foreign investor(s), with full control over management and operations in China.
Pros and cons of China WFOE companies
Pros
- Separate legal entity in China
- Feasible to carry out permitted business activities (within the business scope stated in the business licence)
- Negotiable tax incentives with local government (where applicable)
- Ability to hire local staff
- More flexibility in strategic management
Cons
- More complex application process; each step may have a significant impact on future development—business scope, financing, tax rates, board management, and more.
- Capital injection may be required to meet minimum levels for specific industries and regions (e.g. free trade zones and export processing zones). Minimum capital is often around USD 140,000 (varies by location and sector).
- Although a WFOE is limited liability in nature, a legal representative must be appointed and may bear significant personal exposure depending on circumstances.
- Registered capital requirements vary by setup location.
China WFOE document requirements (general reference)
Prepared by client
- Five proposed enterprise names in Chinese for the new company
- Copies of business licence or certificate of incorporation / commercial registration and a brief introduction of the investor
- Company introduction materials
- Passport copy of the legal representative of the investor
- Resume and four one-inch photos for the legal representative
- Supervisor’s passport copy
- Lease agreement for the WFOE premises (term not less than one year, copy) and property right certificate of the owner (copy with seal). Some registration locations require the lease to be certified by the housing authority—depends on local rules.
- Embassy certification: overseas corporate documents may need to be certified by the Chinese embassy in the investor’s jurisdiction (subject to local requirements).
- Hong Kong company: where applicable, Hong Kong company documents may need certification via approved channels (e.g. China Legal Service (HK) Ltd.).
- Bank reference letter issued by a non-Chinese bank that has a relationship with the foreign enterprise (typically valid within six months).
- Documents in languages other than Chinese should be translated into Chinese.
Prepared by us
- Appointment letters for board members
- Articles of association
- Feasibility study report—drafted by us, signed by the investor
Please supply the following information
- Business scope and product list
- Three-year business plan for the new company, including sales quantity and sales amount by product and business model
- Organisation structure and planned headcount
- Estimated total investment and allocation; estimated registered capital
- Entrustment agreement
- Application for registration with the Administration for Industry & Commerce (as required locally)
Rules, forms, and capital thresholds differ by city, zone, and industry. This summary is for general reference only and is not legal advice—confirm requirements with qualified advisers for your target jurisdiction.