Creation of a foreign WOFE company in China

Vous souhaitez développer votre activité commerciale en Chine en créant une société (You may want to develop your business in China by setting up a company (or subsidiary) to better manage your business there?

As a foreign investor (individual or legal entity), you can set up a company in China. There are various types of company, including the WOFE (Wholly Foreign Owned Enterprise), which is the most common type of company used by foreign investors wishing to develop their business in China.

The WOFE is a limited liability company. To set up a WOFE, you first need to check that your business sector does not fall within any of the investment sectors restricted or prohibited to foreign investment in China (hereinafter ¨the negative list¨). If your business sector does not fall within any of the sectors listed in the negative list, then setting up your WOFE is automatically authorized, and since 2020 it is no longer necessary to apply for prior authorization.

The negative list is published by China's NDRC (National Development and Reform Commission) and MOFCOM (Ministry of Commerce of the People's Republic of China) and is updated regularly. 

The procedure and various documents required to register a WOFE may vary depending on the Chinese city in which your company is registered. Over the past 2 years, many cities in China have put the registration procedure online to shorten the time needed to register and obtain the k-bis (Business Certification Registration). 

Today, the procedure for registering a WOFE is relatively short (around 15 days) compared with the second essential procedure for finalizing the creation and future operations of a WOFE: opening a bank account. 

In fact, before opening a bank account and inject the capital, all FDI (Foreign Direct Investment) must apply for prior authorization from SAFE (The State Administration of Foreign Exchange) in the city in which the WOFE is registered.

Once SAFE authorization has been granted, the WOFE can open a bank account in China, register for tax purposes and receive foreign investment into China. This second formality generally takes between 4 and 6 weeks.

The creation and operation of a WOFE are very often governed by different sources of Chinese regulations, requiring regular applications and formalities with the various administrations.

Thanks to our expertise and experience in the practice of company law in China, we can help you in the following areas:

-              advising and assisting you to set up your WOFE company 

-              Advising and coordinating the running and specific operations of your WOFE company, covering all legal, administrative, tax and labor issues.

To develop your new project quickly in China. 

Zhengnan GONG

Attorney at Law at Paris and Chinese Bars