<img src="https://mc.yandex.ru/watch/95786400" style="display:none;" alt="">

Wholly Foreign-Owned Enterprise Registration

From choosing the right type of WFOE to completing all registration steps, Hongda will provide a one-stop solution to ensure a smooth start for your business in China.

What’s a WFOE in China?

A Wholly Foreign Owned Enterprise (or WFOE for short) is a type of limited liability company registered in China that is wholly owned by one or more foreign investors. This type of business entity ensures that foreign investors have complete control over the company with full ownership of their business operations. Forming a WFOE in China can bring you the following major advantages:

  • Independent operation: With a WFOE in China, foreign investors do not need to cooperate with a Chinese business partner for shared ownership, meaning that they can make independent business decisions.
  • Simplified registration: The process and documents for registering a WFOE in China are simpler than those for other types of business entities, allowing foreign investors to launch their businesses in a short time.
  • Protected intellectual property: setting up a WFOE in China makes it possible to apply for a patent or trademark under your company’s name, ensuring that your valuable IPs are well protected.

As long as your company will not be engaged in industries listed in the ‘Market Entry of Foreign Investment (Negative List)’ published by the Chinese government, you will be allowed to operate with 100% of foreign capital. WFOEs can be generally classified into the following types:

  • Consulting WFOE: A consulting WFOE is the simplest foreign-owned legal entity to set up and is usually used for marketing, consulting, staff training, software development, international logistics, and financial services. 
  • Trading WFOE: A trading WFOE is chosen by foreign investors hoping to engage in trading activities. In addition, when it comes to importing goods from abroad or exporting goods from China, an ‘Import/Export License (link to import/export license service page)’ will be compulsory to legally conduct international trading activities.
  • Manufacturing WFOE: A manufacturing WFOE mainly focuses on producing goods in China for domestic consumption or international export. By setting up a manufacturing WFOE, foreign investors can fully control their production processes, quality standards, and supply chain management.

 

How to Register a WFOE in China?

Documents Required for a WFOE Formation in China

To register a WFOE in China, you need to prepare the following documents. No worries, Hongda will guide you through these!

  • Legal representative’s identification information: passport (for foreigners) or national ID card (for Chinese citizens).
  • Shareholders’ identification information (the shareholder can be either an individual or an enterprise).
  • Proof of operation address: a lease rental contract or house ownership certificate. Or you can choose Hongda’s affiliated registered address service to save more budget!
  • A company name in Chinese.
  • Description about the company's business activities and operation scope.

Please note that the identification documents of the shareholders (such as passports or incorporation certificates) must be notarized by the local notary office and authenticated by the Chinese embassy or consulate abroad. You may also apply for an Apostille Certificate instead if it is applicable to your country.

 

Steps to Register a WFOE in China

For you to understand what we are doing, we will report different steps and stages to finally set up your WFOE. Our thorough WFOE checklist will also guide you in every process.

Step 1: Company Name Pre-approval

The first step in establishing a WFOE in China is to come up with a name for your company. According to the regulations in China, you need to follow a format when giving your company a name. You can read more about ‘how to name a Chinese company (for foreign investors)’

Step 2: Application Materials Preparation

After the company’s name is pre-approved, you will then need to prepare the registration materials and documents. Hongda will help you prepare the documents and guide you through all the difficulties while gathering the materials.

  • Shareholders' passports or the copies of overseas company registration documents (required the foreign company serves as the investor). The passports or incorporation documents need to be certified by either consulate authentication or Hague authentication. You can click on this blog to learn more about Hague authentication.
  • Company director’s passport copy;
  • Company office lease rental contract: the office will be used as the 'registered address’ shown on the business license. Hongda also provides affiliated registered address services to save your budget by cutting the fees of renting physical offices.
  • Company’s information description: the registration information of the company, including the business scope, investment capital, operation period, and the holding ratios of shareholders.
  • Supportive documents: Hongda will prepare a series of documents for the director and shareholders to sign (black ink signatures in hard copies).

Among all the information mentioned above, the most important item might be the investment capital of your company. It is important to note that the Chinese Company Law has been revised in 2023, introducing significant changes to the investment capital system. To read more about the changes brought by the revised Chinese Company Law, please click our latest blog: the key changes by the Revised Chinese Company Law.

Step 3: Obtain License and Apply for Company Seals

After successful application, the business license of your WFOE will be issued within 5 working days, followed by an application of the company seals. If you are not familiar with the management of the company seals, you can choose Hongda’s company seal management services for an easier operation

Step 4: Tax Registration

Tax registration is the legal registration process that must be completed within 30 days since the issuance of your company’s business license. This process is designed to ensure that enterprises legally pay taxes and comply with Chinese tax laws.

Step 5: Open Corporate Bank Account

For normal operations in China, you need a company bank account to manage your daily income and expenses. You may go through various steps such as on-site visits, submission of documents, and account activation. Depending on the requirements of different banks, you might need to submit various application materials. Hongda's China Bank Account Opening service will assist you in selecting the most suitable bank and support you through the entire account opening process. You are welcome to visit our bank account service page to learn more about the relevant information.

Step 6: Obtain Work Permit and Employment Residence Permit

According to Chinese legal regulations, foreigners residing or staying in China are required to hold the corresponding type of visa. This means that if you want to work legally in China, you need to apply for and hold a work-type work permit and residence permit, otherwise, you may face penalties from the Chinese immigration authorities. Applying for a work permit is a relatively complex process, requiring the preparation of many documents and taking about 1.5 months. Let Hongda assist you in applying for a work permit and residence permit to comply with the regulations of Chinese immigration law. Please click here to learn more.

Step 7: Hire Qualified Employees

Depending on the needs and scale of your enterprise, you may need to recruit employees to support the operation of your business. Before hiring employees, you need to clarify job requirements, develop a recruitment plan, and conduct recruitment according to local labor laws. Hongda now provides comprehensive HR services, including EOR, PEO, and headhunt to find the ideal candidates for you! We are also happy to support your employees with our payroll services. Please read related service pages or book a free meeting with us to know more!

Step 8: Ongoing Compliance

Now your WFOE is ready to start operation. However, during this process, you will still need to face several compliance affairs throughout the life cycle of your WFOE.

  • Bookkeeping and tax report: Bookkeeping involves the systematic recording, organizing, and maintaining of all financial transactions of a company. This practice is fundamental for tracking income and expenditures, financial analysis, and strategic planning. Outsourcing bookkeeping to Hongda will help you save money while enjoying high-quality services. We will provide daily transaction recording and a monthly tax report for your company!
  • Annual Maintenance: Annual Maintenance refers to a series of tasks performed yearly to comply with legal, regulatory, and operational requirements. These tasks may include renewing licenses and permits, completing annual filings with regulatory bodies, updating corporate records, and performing financial audits. By choosing Hongda’s yearly maintenance service, you will easily pass the annual inspection process without any stress!

 

Factors to Consider When Setting up a WFOE in China

When registering a WFOE in China, there are several important factors you should consider during the forming process for a smooth formation.

WFOE Registered capital

The registered capital of a WFOE is the total amount of capital contributed by the shareholders to form the company, either in the form of cash, land use right, intellectual property, equipment, and/or other assets. A WFOE’s registered capital needs to be declared in the Articles of Association and submitted during the registration process. In 2024, the revised China Company Law was put into effect, in which the regulations regarding registered capital changed. 

Business Location

A careful consideration of the business location of your WFOE in China is crucial, as it can influence the administrative and tax policy incentives you can enjoy from the local government. Within a specific city, the policies may also vary depending on the districts where your WFOE is registered. To find an ideal address for you, Hongda offers an affiliated registered address service for you to locate your company. Please click to see more about our registered address service page.

Special Licenses and Permits

Some business activities in China may require additional permits and licenses for a legal operation. For example, if you want to open a restaurant in China, you need to apply for a Food Operation License in addition to a company Business License. 

Why Choose Hongda?

Quick Processing

With our experienced team members, we can process your projects faster than others.

No Success, No Charge

Hongda's promises that we only charge once your project is successfully completed.

Tailored Services

We will provide the most suitable business proposal based on your own case.

Trackable Process

Hongda has an online system for you to track any updates of your projects.

Frequently Asked Questions

Still have a question? No worries! We are glad to answer!

How to name a company in China?

To name your WFOE in China, according to the Company Law of the P.R.C., you will have to follow the regulated format:

  • Location of company + Company name/title + Category of operation + Business type.

You can know more about the naming regulations in our blog: How to name a Chinese company (for foreign investors).

Do I need to travel to China to register my WFOE? 

No, you don’t need to travel to China. By partnering with Hongda, you can enjoy remote WFOE registration service. All you need to do is to prepare some documents and deliver them to Hongda and let us take care of the rest of the work.

What is the minimum investment required to set up a WFOE?

In 2014, China amended its Company Law to abolish minimum capital requirements. However, every city may impose its capital requirements, especially for manufacturing WFOE or WFOE engaging in special industries requiring additional licensing.

For most companies, the amount of minimum capital will depend on the location and the nature of the business. You can book a meeting with our experts to discuss your business plan and I can help you determine the amount of your register capital.

What are the ongoing compliance requirements for a WFOE?

The basic compliance requirements for a WFOE include:

  • Monthly accounting and bookkeeping;
    Filing quarterly and monthly tax returns;
  • A renewal of documents such as the business registration certificate;
  • Examination or auditing of financial documents;
  • Tax filing;

It is a great idea to choose Hongda’s all-in-one package for life-long support to keep you compliant all year long.

What are the company seals and why are they important?

Company seals are also called company chops or company stamps. They are generally used to replace signatures as used in Western countries. A company seal is the official representative and legal evidence of the company’s activities.

The most important one of all the seals is the official company seal. It has the widest scope of use among all the seals and it stands for the company itself. All letters, official documents, or contracts issued in the name of the company can be stamped with the official seal, which will legally bind the company. Keep it SAFE!

Sound United is the leading designer and manufacturer of consumer audio products in the US. Sound United has been using Hongda since 2013. Moving one’s operation to China is not a small task. But Hongda’s expert services helped us set up a company and deal with tax issues so we could get on with growing our business in no time at all, and that’s why we continue to use them today.



Jack Peng

Asia Pacific Vice President | Sound United

Sound-United-1

Still have a question? Get in touch today!