359:(SAFE). Dividends cannot be distributed and repatriated overseas if the losses of previous years have not been covered while dividends not distributed in previous years may be distributed together with those of the current year. Repatriation of the registered capital is possible upon dissolution of the WFOE. For most WFOE types, paid-in capital is no longer a part of business registration. When the company is registered, no capital verification report is required either.
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375:; something unnecessary with a Representative Office. Normally 15% of the total investment needs to be injected within one month after obtaining the business license starting from 50,000 USD. It is important to note that regional differences in regulations and practical differences in the application of Chinese legislation can also apply. A WFOE comes with more legal rights than a
379:(RO). Consequently, its process of liquidation is more time consuming and expensive when compared to ROs. The liquidation is divided into four steps and might take up to 12 months (notification of the relevant authorities, setting up a liquidation committee, submission of a liquidation report to the authorities, deregistration of the company and closing of the bank account).
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WFOEs may be limited-liability companies, as distinct from corporations, partnerships (limited or general), and proprietorships organized by foreign nationals and capitalized with foreign funds. WFOEs are mostly used by foreign companies to start a manufacturing operation in China. This can give
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Another recent variant (the
Foreign Invested Commercial Enterprise FICE) of the WFOE has also come into effect, and are used mainly for trading and buying and selling in China. The registered capital requirements for a FICE are lower than for a WFOE as the FICE does not need to fund plant and
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greater control over the business venture in mainland China and avoid a multitude of problematic issues which can potentially result from dealing with a domestic joint venture partner. Such problems often include profit not being maximized, leakage of the foreign firm's
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which allow the importation of components duty-free into China, to then be added to
Chinese-made components and the finished product then re-exported. An additional advantage with this model is the ability to claim back
252:, WFOE has been abolished and superseded by a new type of business referred to as "foreign-funded enterprise" (外商投资企业). Existing businesses are expected to transition to the new designation within five years.
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on the
Chinese manufactured component parts upon export. In addition, WFOEs now have the right to distribute their products in mainland China via both wholesale and retail channels.
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The disadvantages of establishing a WFOE include the inability to engage in certain restricted business activities, limited access to government support and a potentially steep
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WFOEs are among the most popular corporate models for non-PRC investors due to their versatility and structural advantages of a representative office or joint venture.
241:. The unique feature of a WFOE is that involvement of a mainland Chinese investor is not required, unlike most other investment vehicles (most notably, a sino-foreign
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upon entering the mainland
Chinese market. As a WFOE is a type of limited liability company, it requires the injection of foreign funds to make-up the
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WFOEs are often used to produce the foreign firm's product in mainland China for later export to a foreign country, sometimes through the use of
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and the potential for joint venture partners to set up in competition against the foreign firm after siphoning off knowledge and expertise.
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A key feature of a WFOE is that it allows for any profits made in running the business to be repatriated without prior approval of the
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the ability to uphold a company's global strategy free from interference by
Chinese partners (as may occur in the case of
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501:"What are the types of legal entities in China? - China Company Incorporation — TKEG Expat China Consulting"
237:-based business wherein foreign parties (individuals or corporate entities) can incorporate a foreign-owned
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457:"FOREIGN INVESTMENT LAW OF THE PEOPLE'S REPUBLIC OF CHINA - 中華人民共和國外商投資法 — TKEG Expat China Consulting"
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Please help update this article to reflect recent events or newly available information.
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561:"The Ultimate Guide for China WFOE Formation in 2018 | Shenzhen | Beijing | Shanghai"
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519:"How to Structure Your Investments in China - Corporate Establishment Quick Facts"
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Legal term in China, a type of enterprise founded in the PRC by foreign investors
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exempt from having to obtain an import/export license for products manufactured;
537:"China Wholly Foreign Owned Enterprise (WFOE) | Shenzhen | Beijing | Shanghai"
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435:"Law of the People's Republic of China on wholly foreign-owned enterprises"
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Corporate tax: 15% to 25% (depending on the WFOE's location and industry).
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Standing
Committee of the National People's Congress (18 October 2000).
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Consumption tax:1% to 56% of sales revenue of goods. Export are exempt.
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total management control within the limitations of the laws of the PRC;
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and other intellectual property, in accordance with international law;
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Foreign
Investment Law of the People's Republic of China
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shareholder liability is limited to original investment;
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Land appreciation tax: 30% to 60% of gains on transfer.
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476:"How to Read China's New Law on Foreign Investment"
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586:"How to close a WFOE and a Representative Office"
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391:Income tax: rates up to 35% of business profits.
403:Resources tax: 1% to 20% depending on material.
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348:simpler establishment than a joint venture;
264:Basic elements of a WFOE (Click to enlarge)
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357:State Administration of Foreign Exchange
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321:the ability to both receive and remit
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98:Foreign business sole proprietorship
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325:to the investor company overseas;
584:Hoffmann, Richard (2016-10-16).
351:full control of human resources.
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248:Starting January 2020, per new
219:wholly foreign-owned enterprise
58:Wholly Foreign-Owned Enterprise
474:Qian Zhou (October 31, 2019).
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173:Foreign investment enterprise
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523:Dezan Shira and Associates
289:machinery acquisitions. .
300:Such advantages include:
239:limited liability company
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621:Types of business entity
328:increased protection of
225:, sometimes incorrectly
157:Traditional Chinese
137:Alternative Chinese name
82:Traditional Chinese
143:Simplified Chinese
68:Simplified Chinese
631:Foreign trade of China
565:www.set-up-company.com
278:Special Economic Zones
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250:Foreign Investment Law
377:Representative Office
271:intellectual property
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541:www.pathtochina.com
480:China Briefing News
311:a new, independent
397:Stamp duty tax: 1%
373:registered capital
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231:investment vehicle
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195:Hanyu Pinyin
120:Hanyu Pinyin
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485:22 November
441:15 November
256:Description
615:Categories
600:2019-06-26
570:2016-02-12
546:2017-02-12
505:TKEG Expat
461:TKEG Expat
420:References
330:trademarks
293:Advantages
201:wàizī qǐyè
408:See also
383:Taxation
334:patents
34:updated
88:外商獨資企業
74:外商独资企业
487:2020
443:2013
233:for
227:WOFE
223:WFOE
163:外資企業
149:外资企业
323:RMB
283:VAT
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