Why WFOE?
WFOE (Wholly Foreign-Owned Enterprise) is a Chinese registered company that is completely owned by foreign investor and is the most common business structure when registering a company in China as it permits the most freedom in business management.
What is a WFOE?
A WFOE may generally be set up by foreign investors where the type of business will be carried out by the WFOE is not subject to any shareholding restrictions set out in the Catalogue or other PRC regulations.
The process of establishing a WFOE in China generally takes between one and two months. An office space must be leased for future business before beginning the WFOE application process. A business license for WFOE is usually issued for 30 years.
The advantages of establishing WFOE
- Independent and free to implement the parent company's global strategy without interference from Chinese partners
- Able to conduct business formally, issue RMB invoices to customers and obtain RMB income
- Profits can be converted to foreign currency for repatriation
- Allowed to protect company’s intellectual property and technology
- Overall control of human resources
- In many cases, it requires only one director, who can be of any nationality and reside outside of China
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