1. What type of company is a WFOE/WOFE?
WFOE / WOFE is a limited liability company, the name stands for “Wholly Foreign Owned Enterprise” or “Wholly Owned Foreign Enterprise”.
2. Can a Chinese citizen be a shareholder in a WFOE / WOFE?
No. WFOE / WOFE is fully owned by foreign investors.
3. Can a Chinese citizen be a director / supervisor of a WFOE / WOFE?
Yes. But in that scenario, the company should be owned by foreign investors, i.e. Chinese citizens can only take positions in the company.
4. Can I apply for a work visa being only a shareholder of a WFOE / WOFE?
No. In order to apply for a work visa, investors (or the shareholders) should also have a position in the company, e.g. director, supervisor, or other position.
5. Can a manager of a WFOE / WOFE get a work visa without the director having any work visa, i.e. director is outside of China, but wants to have the manager of a WFOE / WOFE in China to run the company?
No. According to visa policies, the director of a WFOE / WOFE should get his/her work visa first, before other employees get their work visas in any WFOE / WOFE. If the director is not granted a work visa, other employees will not be granted work visas either.
6. How many visas can a WFOE / WOFE have?
It depends on several factors. Under standard conditions (without making any investment, and without any paid up capital – with 0 balance account), only the director can apply for a work visa, and given all the requirements of a work visa (please check) are fulfilled, the work visa is granted between 2 months and 1 year (the length and validity depends on several factors) for the first time.
7.How long does it take to finish a WFOE / WOFE registration in China?
In average it takes around 1-3 months. If you need to wrap it up in 2 weeks urgently, please contact us :)
It’s very hard to be exact on this, because the application process involves the investors to either travel to China to sign the application documents in person, or get their passports legalized at the Chinese embassy in their country of residence. Also, after the initial application, there are documents to be sent to the investors via email, and they will have to sign and return those documents to us by post – which might take 7-10 days to reach our office.
Therefore, our clients should allow at least 1-3 months just finish the company registration process. Obviously, we try our best to minimize the whole process, but it’s physically impossible to be very precise on timeframe.
8.Can a WFOE / WOFE operate all over China?
Yes. There is no legal requirement to register a WFOE / WOFE in the city/region/province of operation, e.g. a WFOE / WOFE registered in Shanghai can operate in Guangzhou without any restrictions.
9. Can a WFOE / WOFE open a store on aliexpress.com/taobao.com/alibaba.com/tmall.com?
Yes. A WFOE / WOFE can own and operate a store on any e-commerce platform in China, and also in most of the foreign e-commerce platforms (given the laws of that specific country permit) like Amazon.com, ebay.com, etsy.com etc. NOTE: for international e-commerce platforms, clients should check the requirements and local policies.
10. What kind of taxes should a WFOE / WOFE pay?
There are 4 kinds of taxes that a WFOE / WOFE should consider:
-VAT (paid monthly from sales of goods/services, only for general taxpayers, and no VAT for export)
-Corporate Tax (Paid annually, paid from net profit) -Personal Income Tax for employees (paid monthly, rate depends on the amount of salary paid to each employee)
-Social Security (paid monthly, amount varies from cities to cities)
11. Is there any paid up capital to form a WFOE / WOFE?
No. Currently, there is no paid up capital to register a WFOE / WOFE in China (since 2016)
12. Is there any registered capital for a WFOE / WOFE?
Yes. Registered capital is the amount of capital (not earnings) required to get a WFOE started. This amount is unique to every WFOE. For a WFOE that will build a factory, the number may be over a billion dollars. For a two person consulting WFOE, the number is often quite small (100K-200K USD), for a one person trading WFOE it can be 150K-300K USD. China has no formal requirement for the amount of registered capital. There is also no longer a requirement on when the capital must be contributed and there is no fixed rule on the amount of each contribution of capital. The government generally requires that the total registered capital be contributed within 20-30 years (or never, if the owners decide to deregister the company), which effectively means there is no time pressure on the contribution. NOTE: Under Chinese laws, payments from the shareholders that exceed the registered capital amount are treated as income to the WFOE and are taxed at China’s normal income tax rates. Capital contributions, on the other hand are not taxed.
13. Can a director (or other employees) get a visa in another city with a Shanghai WFOE / WOFE?
It might be possible under specific conditions, e.g. a Shanghai based WFOE / WOFE opens a branch in that particular city, hires employees in that branch, and employees of that new branch can get their visas in that particular city/region. However, under standard conditions, i.e. without any branch in other cities or regions of China, all employees of a Shanghai based WFOE / WOFE should get their visas in Shanghai only (or get a work visa at the Chinese embassy in their countries of residence, then convert their work visas into residence visas in Shanghai only).
14. Is a corporate director allowed in a WFOE/WOFE?
No. Only individual director is allowed
15. Can my existing company own a WFOE / WOFE?
Yes. Your existing company outside China can be the full shareholder (or partial) of a WFOE / WOFE.
16. What is the full process of a WFOE/WOFE registration?
1) Name registration - Takes 5-7 business days.
2) In person visit to the government department to sign the application documents - takes 1 business day.
This can be avoided if a client sends us the legalized copy of their passport. Legalization should be done by the Chinese embassy in the country of residence.
After we have received the legalized copy of a client’s passport, we will send a pack of documents to be signed by the client via email, with full instructions. After signing, the client should return the signed documents by post.
Shipping the documents to us might take around 7-10 days (depending on the courier company the client uses – DHL, FedEx, TNT etc.)
3) Waiting for Business License – takes 7-10 business days.
4) Corporate RMB Account opening – takes 1 business day.
5) Waiting for the Corporate RMB Account opening license - takes 1-10 business days.
6) Foreign currency corporate bank account opening – takes 1-10 business day.
7) Tax registration – takes 2-7 business days.
17. How much does it cost to form a WFOE/WOFE?
- Currently (2021) we charge 15,000 RMB to set up service (consulting), the fee includes the following items:
- Company name checking
- Company name registration
- Company registration
- Corporate Bank Account opening
- 1 Work Visa for the company director
- Company Tax Registration
18. How much does it cost to maintain the company? (WFOE/WOFE)
- 12,000 - 24,000 RMB for 1 year for the dedicated desk for 2 people in a shared office space in Shanghai/Beijing/Shenzhen/Guangzhou, or 5,000 - 15,000 RMB for 1 year for the dedicated desk for 1 people in a shared office space (Hainan);
- 6,000 - 8,000 RMB for 1 year for the accounting service (accounting service is limited to monthly tax filings) Shanghai/Beijing/Shenzhen/Guangzhou, or 3,600 - 6,000 RMB for 1 year for the accounting service (accounting service is limited to monthly tax filings) - Hainan
19. Can a WFOE/WOFE own a physical (brick and mortar) store in China?
Yes. A WFOE/WOFE can start a brick and mortar store in and outside China (outside China – subject to local laws and policies in that specific jurisdiction).
20. Can I use my WFOE/WOFE’s online corporate banking to receive and send foreign currency in and outside China?
No. China still maintains foreign currency control policy, i.e. once the WFOE/WOFE foreign currency account is set up, if the company director is not in China, the company owners have to be able to leave the company stamps with the accounting department, so they can go and process the foreign currency incoming and outgoing transactions in the bank (there are certain forms to be filled and signed by the company director – this can be done from distance – but those forms will have to be stamped and brought to the bank in original – this is where the accountants will / can act on behalf of the company, if they have the company stamps)
21. Can I use my WFOE/WOFE’s online corporate banking to receive and send RMB in China?
Yes. Online banking can be used to send and receive RMB without any forms to be filled or visiting the bank in person.
22. Can a Trading WFOE/WOFE import and export all sorts of products?
No. There are some restricted products and they need additional licensing. E.g. Alcohol, Food and Beverage (non-alcohol drinks). I.e. Trading WFOE can trade with all the products which do not require any additional permits/licenses. Contact us for specific products.
23. Can a WFOE/WOFE be a shareholder in local companies in China?
Yes. A WFOE/WOFE can purchase shares in local companies in China except for restricted industries.
24. What is the process of applying for a work visa in China by forming a WFOE/WOFE?
1. Company registration process must be completed fully (1-3 months)
2. Submitting the necessary documents for work permit online and waiting for the results – 5-6 business days
3. Once the online application is approved (#2 above), the applicant will have to visit the government office to submit the original documents, then wait for the results – 10-15 business days
4. Picking up the work visa
25. What is the process of applying for a work visa at the Chinese embassy after forming a WFOE/WOFE?
1. Company registration process must be completed fully (1-3 months)
2. Shanghai Silk Road will submit the necessary documents for work permit online and waiting for the results – 5-6 business days
3. Once the online application is approved, Shanghai Silk Road will visit the government office and submit the documents at the government office in person on behalf of the client, and wait for the results – 10-15 business days
4. The work permit notification letter is issued by the government
5. Client will apply for the Z VISA with notification letter at the Chinese embassy
6. Once the client receives the Z visa, they have to travel to China and submit the documents at the government office
7. Client applies for the residence permit with working rights and wait for the results – 10-15 business days
8. Picking up the work permit card
26. What is required from the clients to form a WFOE/WOFE?
1. Legal representative information - Scanned copy of passport, Mobile number, Email address (less than 20 characters)
2. Supervisors information - Scanned copy of passport, Mobile number, Email address (less than 20 characters)
3. Name choices for the WFOE/WOFE - one English name, Several Chinese names (5-7)
4. Registered capital - For consulting WFOE/WOFE we suggest 100,000 USD, For trading company we suggest 300, 000 USD
5. Business scope
27. What documents are required for a work permit?
1. Passport – ID Page, Latest entry page, Current VISA page
2. White background photo
3. Medical report
4. Highest Diploma - Original degree, Legalization by Chinese embassy, Chinese translation of degree and legalization
5. Non criminal record (Background check), Legalization by Chinese embassy, Chinese translation of original & legalization
6. Working experience letter for 2 years, Chinese translation
7. Emergency contact (in or outside China) – name & phone number, & email address.
28. What documents are required to extend the work permit?
1. Work permit card 2.
3. Current VISA page
4. Latest entry stamp page
5. Emergency contact (email and phone number)
29. What is a Capital Report and when is it required?
Capital Report is required after the client makes an investment into the newly formed WFOE/WOFE bank account (Investment: 10-12K USD, when a client does not have a university degree to apply for a work visa by forming a WFOE/WOFE in Beijing/Shanghai/Guangzhou/Shenzhen).
Capital Report is prepared by an accountant in collaboration with the bank after the required investment has been made by a client, and the process takes anywhere between 10 to 20 business days.
30. Can the investment (10-12K USD – when the client does not have a university degree to apply for a work visa in Beijing/Shanghai/Guangzhou/Shenzhen) be used immediately?
No. Clients should wait for the capital report to be finished before they can use the investment money for company expenses.
NOTE: Investment money cannot be withdrawn even after the capital report, i.e. it can only be used for company expenses, e.g. for purchases, salaries, business expenses etc.