WFOE(Wholly Foreign Owned Enterprise)

 

Approval of a wholly foreign-owned enterprise depends on whether the enterprise is deemed to benefit the development of China's national economy. The Chinese government prefers enterprises, which employ advanced technology and equipment to manufacture products that are important to the national economy and are not produced in China. Enterprises, which export a large portion of their products, also are more likely to be approved. Ministry of Commerce is responsible for approval of wholly foreign-owned enterprises, although other national and local authorities typically participate in the pre-approval screening steps required before the application documents are forwarded to Ministry of Commerce for approval. Because the foreign investor is the sole operator of a wholly foreign-owned enterprise, it is responsible for guiding its application through different Chinese authorities.


Steps to set up a WFOE in China

1. Application procedures

Preparing and Presenting a Project Proposal

The foreign investor has to complete a project proposal and present it to the government authority that will decide whether or not to approve the proposal within approximately one month after receiving the proposal.

Submitting the Proposed Company Name

3 optional names are required.

Preparing and Submitting a Feasibility Study Report

After the project is approved, the foreign investor has to prepare a feasibility study. The authority will help to coordinate on the project if any problems should arise.

Submitting the Articles of Association

While the foreign investor is preparing the report on the feasibility study, he may also draw up the articles of association and submit them to the authority that will reply around one month after receiving the feasibility study report and articles of association.

Application for the Approval Certificate

After the report on the feasibility study and articles of association are approved, the foreign investor has to apply for the Approval Certificate, which will normally be issued within one week.

Application for the Business License

The foreign investor has to make an official registration with the government authority within 30 days upon receiving the Approval Certificate and then apply for a Business License. The authority will normally issue the Business License within 30 working days.

The procedures and related documents may vary depending on specific projects, Chinese regulations and special approval as well. However, the Wholly Foreign-Owned Enterprise is officially established on the date when the Business License has been issued.

Language of the Documents

All the documents submitted to the government authorities must be conducted in CHINESE language.

Registered Capital

The minimum registered capital for a Wholly Foreign-Owned Enterprise is from US$ 12, 000 to US$350,000 depending on the nature of business.

2. Document Requirements for Wholly Foreign-owned Enterprise

-  Bank Statement of the Credit
-  Project Proposal (purpose, business scope, period, investment amount, among others)
-  Certificate of Registration and Testimony
-  Statement on the Products and Technologies
-  Duplicate of Confirmation Letter of the 3 Applied Company Names
-  Report on Feasibility Study
-  Memorandum & Articles of Association
-  Name list of the Board and senior Executives
-  List of Equipments to be Provided (if any)
-  Passport or Residential Card of the Legal Person
-  Lease Agreement or Purchasing Contract of Company Premises
-  Certificate of Property of the lessor
-  Authorization Documents for the Board and senior Executives
-  Two photos of legal person and two photos of contact person
-  Other documents (relevant authorities may require additional documents as per specific cases)