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Wholly Foreign-Owned Enterprise in China: Part 2
Apr 14, 2021
The Establishment Process
The process of setting up a WFOE varies as it is dependent on the type of enterprise being established.
WFOEs are mainly classified (but not limited to) the following three types: Consulting WFOE, Manufacturing WFOE and Trading WFOE.
This establishment process can be broken down into two parts: the Pre-Licensing process and Post-Licensing process.
PRE-LICENSING PROCEDURE:
- Name Registration
- Application and reservation of the selected company name must be made to the State Office of the Administration for Industry and Commerce (SAIC).
2. Office/Facility Lease
- It is necessary to have a minimum 12-month lease for company space in the city of registration prior to applying for a WFOE incorporation.
3. Application for Approval/Record Filing
- Applicants are expected to go through a simplified record-filing process and require the approval of the Ministry of Commerce (MOFCOM) before obtaining the WFOE business licence.
4. Application for Five-in-one Business License
- This five-in-one business license from the SAIC consists of: Business license; Organisation code; Tax Registration certificate; Social security registration certificate; and Statistical registration certificate.
POST-LICENSING PROCEDURE:
- Carving chops
- All companies operating in China require a company seal or chop as an official representation of the firm, which can be obtained from the Public Security Bureau (PSB) after successful registration with the SAIC.
2. Opening 2 banks accounts
- A WFOE in China needs to have a minimum of two bank accounts: an RMB basic account, and a foreign currency capital contribution account. A WFOE can establish bank accounts with both Chinese and international banks.
3. Register for Taxes
- Once granted the business license, companies must then register for taxes at the State and Local Tax Bureau
The information provided serves as a general reference guide and is not strictly advised by Funds Partnership Asia.
References:
https://www.china-briefing.com/news/setting-wfoe-china-step-step-guide/
https://www.hongdaservice.com/blog/setting-up-a-wfoe-in-china-the-process-explained
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