WHY SET UP A WFOE IN QIANHAI?
QianHai in Shenzhen, or to give it its full title “The Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone,” is a special economic zone situated to the far West of Shenzhen, and is not far at all from Hong Kong by sea and road when using the cross-bay bridge at ‘Shenzhen Wan border crossing’ in Nanshan district. Not far to its north lies Shenzhen’s Bao’An international airport too, which is easily reachable by either road or metro.
Long considered China’s ‘Silicon Valley,’ Shenzhen is a major manufacturing hub for many of the world’s best-known electronic brands, such as Apple, Samsung, Huawei, Sony, Panasonic, and much more.
The Qianhai Special Economic Zone is not more than an hour and a half away from all other major PRD commerce and manufacturing hubs: Guangzhou, Dongguan, Foshan, and Zhuhai as well. The location is important, but QianHai began to be developed by the Chinese government in 2010 in order to offer a springboard for a certain range of businesses seen as beneficial to China’s economy in the future, as well as strengthening ties between the Mainland and Hong Kong. It aims to do this by offering a range of attractive benefits in order to bring in services and promote those who wish to innovative.
These include:
- Tax breaks and benefits
- Free and open financial policies
- One of China’s largest startup incubators & accompanying investment opportunities
- World-class logistics
- Higher quality internet and telecoms than much of the rest of Mainland China
- Advantageous subsidies for companies in certain industries
WHAT IS A WFOE?
A WFOE is arguably ‘the best’ type of company for foreign businesses to open in China. The less informed will tell you that it’s impossible to run a company in China without input and interference from a Chinese partner or indeed the government there, however, this simply is not the case.
While you will almost certainly be dealing constantly with Chinese clients, customers, or suppliers, it’s not necessary to go into business with them!
The clue is in the name of this company type:
“Wholly Foreign Owned Enterprise.”
A WFOE has the following features:
- 100% invested in and owned by foreigners
- Can hire local and foreign staff in China
- Can invoice in Chinese Yuan RMB
- Can import and export goods to and from China
- Can transfer profits out of China
- Can protect IPR (Intellectual Property Rights)
So, in fact, it is possible for foreign businesses to operate within China while retaining complete control over their affairs.
Setting up a WFOE in Qianhai
Setting up a Qianhai WFOE requires an investment of 5 Million RMB paid into the capital account, but this can actually be spread out over a 5 to 10 year period and so is not too great a financial burden; furthermore, you can forego this initial investment if you use an existing Hong Kng registered company to set up your WFOE.
Needless to say, this is the recommended approach for your WFOE setup, and a Hongda consultant can provide you with all the in-depth details required and answer any questions you may have.
With a Qianhai WFOE, foreign staff can apply for a tax refund of up to 15% with their individual income tax.
No bank reference letters are required for a Qianhai company setup.
Documents Required To Open A WFOE:
- 2 x Passport Copies of Company Director: These need to be notarized the local Chinese embassy/consulate.
- 1 x Director’s passport copy.
The person who runs the company in China (The China Legal Representative) should provide:
- 1 x white-background visa-standard photograph (you can visit the official photo requirements by the Ministry of Foreign Affairs of the P.R.C.).
- 1 x Legal representative’s original passport.
- 1 x Feasibility report
- 1 x Proposed product list
A WFOE must have business premises address for registration
You will need to provide the following for the registered office address:
- 2 x copies of the Property Ownership Certificate of the Registered Office Address.
- 2 x copies of the original Lease Contract and Invoice of Registered Office Address.
- 2 x copies of Landlord’s China ID card.
When registering a Qianhai WFOE with Hongda you automatically receive a virtual office situating your business in The Qianhai Special Economic Zone so you don’t have to physically register an office there, however, to set up a company bank account the bank will require confirmation of a physical address in China from you. This address doesn’t have to be in Qianhai itself but will have to be a physical address and lease agreement from you. For some banks a personal house lease will suffice, for others, it won’t, but Hongda will be there to assist you with the bank meeting to make sure everything goes smoothly. If you have any queries your consultant at Hongda will be with you every step of the way.
Please note:
It’s normal to be unsure about what some of these documents are or how they should be written. When working with Hongda to set up your WFOE, your account manager will assist you in creating, organizing, copying, and translating these documents wherever necessary. Additional documents may be required by the authorities on a case by case basis. These may depend on your WFOE’s industry, your business plan, and the area in which you’re registering. Hongda will advise if this is the case.
If there is a company opening the WFOE
- 2 x Copies of Company documents, notarized by local China Embassy or consulate (Including certificate of incorporation, business registration certificate, Chief director authorized, regulation)
- 1 x Director’s passport ID page copy
- 1 x Account Audit Report for the foreign bank account providing investment is needed if the investing company has been registered for more than one year
The person who runs the company in China (The China Legal Representative) should provide:
- 1 x Legal Representative’s passport original
- 1 x Resume of Legal Representative
- 1 x Passport Photo of Legal Representative on light colored background
- 1 x Feasibility report
- 1 x Proposed product list
A WFOE must have business premises address for registration
You will need to provide the following for the registered office address:
- 2 x copies of the Property Ownership Certificate of the Registered Office Address.
- 2 x copies of the original Lease Contract and Invoice of Registered Office Address.
- 2 x copies of Landlord’s China ID card.
QianHai WFOE Setup Procedure
Here is the procedure that you will be guided through by your Hongda account manager. We will offer you advice every step of the way in plain English and will make it clear where you are in the process and if we require you to attend any of these steps. The goal is for you to leave it to us, safe in the knowledge that we will successfully open your WFOE as fast as possible, thereby minimizing your stress.
Gain Business name approval: 2 working days.
Gain investment approval: 20 working days
Obtain business license, tax registration certificate, and corporate ID: 3 working days
Obtain company ‘chop’ (stamp): 3 working days
Process foreign exchange registration: 1 working day
Open company bank account: 5 working days
Total time to open your QianHai WFOE: Approx 34 working days
Your QianHai WFOE is open for business!
Please note:
Your attendance to these offices is generally not necessary for every step. Hongda will take care of applications and the submission and collection of documents for you. We will keep you appraised of the process as it progresses.
As you can see, the time it takes to open a WFOE should take up to around 1 month. Your prompt attention to any questions and requests we may have for you, such as supplying us rapidly with the correct documents when required, will help shorten the process.
