Five Must-Have Things for a WFOE Set Up China

After adopting economic reforms in 1979, China’s economy has surprised everyone. In addition to becoming one of the leading economies on the globe, China has become a pace-setter in almost all industries. It is a leader in manufacturing, tourism, technology, and even space exploration. For investors, what makes China more attractive is the mammoth market. You will not only have access to the local 1.4 billion people but the entire 4.3 billion in Asia-Pacific will also be within reach. So, are you ready to take advantage of this market? 

To take advantage of this fast-growing market, you need to start with company registration, and a wholly foreign-owned enterprise (WFOE) is the most preferred model. As we are going to see in a short while, a WFOE set up in China is pretty complex, but there are many benefits that you cannot get from using other investment vehicles. Keep reading as we take a closer look at the five must-have things to open a WFOE in China.

Why a WFOE in China?

WFOE, shortening for wholly foreign-owned enterprise, is a business structure that allows foreigners to have 100% shareholding. This implies that you have a lot of autonomy in decision-making, such as who to employ and product development. Other unique benefits associated with WFOEs include:

  • WFOEs are allowed to engage in profit-based operations. 
  • No sharing of profits. 
  • Works excellently when targeting a long-term presence in China. 
  • Unlike a representative office (RO), you are allowed to hire staff directly. 
  • You can enter into mutually beneficial deals with other brands in your supply chain. 

These are only a few of the main benefits that you should anticipate for opening a WFOE in China. You will enjoy a lot more, such as reduced taxes, if the company is based in free trade areas or away from coastal cities. 

What are the Requirements for a WFOE Set Up China?

To incorporate a company in China, you require a whole range of documents, including the following: 

  • The Company Name: Before the process of company registration can commence, you will need to get the preferred name approved by the State Administration of Industry and Commerce (SAIC).
  • The Managerial Stricture: The company you are creating can only succeed if it has a good structure. So, make every role for different officers, from CEO to supervisors, clearly defined. 
  • List of Controlling Partners: These are the shareholders who have some control over the decisions that are taken by the company. Make sure to follow the recommended format when declaring the controlling shareholders. 
  • Articles of Association: This is a very crucial document because it defines the fine details of how the company will operate. Articles of association should provide information that will help the Chinese administration know more about the company’s operations. For example, what powers will the shareholders and board of directors wield in the company?
  • Feasibility Study:  Whether you are starting a manufacturing venture or pharmaceutical enterprise, the companies registry wants to know if it is viable. Therefore, you need to prepare a comprehensive feasibility study showing how the new venture will be turned into a profitable company. So, craft a good plan factoring in available capital, market competition, entry strategy, and marketing models. 

Once you have prepared all the documents, it is time to make an application for all the required certificates. This can be pretty complex because you have to deal with multiple departments, from the State Administration of Industry and Commerce (SAIC) to the Public Security Bureau (PSC). The process is also expensive for most investors, but you cannot give up as an entrepreneur. This is why you should consider another more convenient method: using an agency of experts. One of the top-rated agencies of experts is Primasia. They have experts in company registration in China, and you can also count on them for help with new market entry strategies, accounting, due diligence, and payroll management. 

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