 |
| Set Up Wholly Foreign-Owned Enterprises WFOE in Wuhan |
Wuhan, the capital of Hubei province,is the most populouscity in central China. In 2015 it has a population of 10.60 million residing in three distinct districts (Hankou, Hanyang, and Wuchang), commonly known as “The Three Towns of Wuhan”. The city is recognized as the political, economic, financial, cultural, educational, and transportation centre of central China.
While Wuhan has for decades been a traditional base for manufacturing, it has also become one of the areas promoting modern industrial change. Wuhan consists of three national development zones, four scientific and technologic development parks, over 350 research institutes, 1,656 hi-tech enterprises, numerous enterprise incubators and investments from 230 Fortune Global 500 firms – enabling the city to offer globally competitive strengths in most business fields. By combining traditional industries such as automobile manufacturing, the starting point of China's economic liberalization, with new hi-tech industries in places like the Optics Valley, Wuhan is positioning itself as one of the most progressive business cities in all of Asia.
For more information about Wuhan, please
visit https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/international-business/csg-china-research-report-on-investment-environment-of-wuhan-en-2013.pdf
Wholly owned foreign entities (WOFEs) are
the vehicle of choice for most people and companies doing business in China. It
is less complex than a joint venture (JV) and allows you to concentrate on what
your employees are up to as opposed to your partners. It is required to
register as a legal person who is restricted to certain businesses. The
enterprise is able to implement strategies that effectively conform to the
interests of the parent company aboard. Moreover, technology and know-how are
given better protection.
No. minimum registered capital is required
for WFOEs with scope of business of consulting, Trading, retailing, information
technology etc. in China. There are minimum registered capital still required
for some industries for instance: Banking, Forwarding etc Since China still
maintains foreign currency control policy, it's still advisable to choose
registered capital within RMB 100,000 ~ RMB 500,000 as the minimum registered
capital. Companies can now determine how much capital will be required to
maintain their operations and must simply ensure that they meet those targets
within a period of 10 years.
The minimum registered amount of capital
takes into account three main issues:
•it determines the maximum amount a WFOE is liable for − upon
reversion, this then also defines the WFOE’s creditworthiness;
•during the foundation period, all capital injections into the
registered capital are tax-free.; subsequent refunds are subject to taxes that
have proven to be difficult to bring into China;
•the registered capital has to be carefully estimated by the firm
since it must be sufficient until the WFOE is financially self-supporting, with
a positive cash flow − in short, the more registered capital, the better
Advantages of WFOE
1. Independence and freedom to implement
the worldwide strategies of its parent company without having to consider the
involvement of the Chinese partner;
2. Ability to formally carry on business
rather than just a representative office function;
3. Issue invoices to their customers in RMB
and receive RMB revenues. Convert RMB profits to US dollars for remittance to
their parent company outside.
4. cheap labor, which can lower your cost;
5. not required to share profits with
Chinese counterpart;
6. Greater efficiency in its operations,
management and future development.
Registration process
The application process to create a company
in China generally takes three to six months. The establishment process varies
based on the WFOE form and the planned business scope. For example, a
Manufacturing WFOE will require an environmental evaluation report, and Trading
WFOEs will need to undergo customs/commodity inspection registration. The
application process can be divided into two parts:
•Pre-registration – what happens before the
company formally exists
•Post-registration – what happens after the
company formally exists
Pre-registration
1. Name registration
1. Name registration
The company name can be translated from
English by meaning and/or phonetically. Verification of feasibility of the
proposed name by the AIC will take a few working days. Only the Chinese name
will be legally binding – the English name is not legally relevant for Chinese
authorities. Note that the words “China” and “International” cannot be freely
included in the Chinese name, and are subject to further requirements.
2. Issuance of approval certificate and
temporary business license
he authorities will issue the approval
certificate and temporary business license after assessing the following
documentation:
From the investor:
• Business license (certificate of incorporation – depending upon
locations, this may need to be notarized in the investor country of origin, and
then translated into Chinese);
• Bank statement to demonstrate credit worthiness (from relevant bank
in country of origin and translated into Chinese); and
• Photocopy of passport of the legal representative of the investor
company.
From the new company:
• About the new business – Name of the company, business scope,
registered capital, business term, lease contract;
• About the legal representative – Photocopy of passport and
passport-size photos;
• About the directors – CVs, photocopies of passports, and
passport-size photos;
• Feasibility study report – Outlining the estimated cash flow for
the next three years;
• Articles of association; and
• Environmental protection evaluation report (if applicable).
The approval certificate will be issued by
the local office of the MOFCOM. Upon issuance, there is a 30-day limit for
registering the company with the AIC, which then issues the temporary business
license.
Post-registration
Following the issuance of the temporary
business license, the WFOE would need to perform a number of formal
registrations at various Chinese government entities, including applying for
carving various seals (or chops) in order to authorize documents on behalf of
the company, as well as opening an RMB account for managing daily operating
expenses and a foreign capital account for receiving foreign currency.
From 1st October 2016, China Ministry of
Commerce has changed the foreign investment approval system into filing system.
It means WFOE whose industry is not restricted type or prohibited type can
directly start the business registration first and then complete the filling
system on website of Ministry of Commerce. This change has greatly reduce the
policy risk when foreign investor plans to start a WFOE in China.
Compared to registering a business in most
Western countries, registering a business in China is challenging work filled
with paperwork and bureaucratic red tape. It is practically impossible to
properly complete the registration process without a qualified agency. Be sure
that the agency is qualified and the agency has good connections and
relationships with the various local authorities, and that they possess
comprehensive knowledge about the numerous important aspects involved with
legally and properly registering a WFOE.
Tommy China Business Consulting has direct
connections in the local government. Since 2006, TCBC has been focusing on
consulting services for our clients to invest in Wuhan China. We are
specialized in establishment of wholly foreign owned enterprises (WFOEs),
setting up of offshore companies, trading services, tax minimization, Assist in
obtaining government approvals and certificates for running business, negotiate
and draft various legal documents provide legal advice, negotiate government
officer for Land acquisition, Advising on formation of WOFE and business
structures ,managing and controlling WOFE in Wuhan China, drafting privacy
policies and structuring commercial transactions.
TCBC will manage all aspects of incorporation to get you a business license in Wuhan China. We offer a range of company formation services including helping you to set up:
TCBC will manage all aspects of incorporation to get you a business license in Wuhan China. We offer a range of company formation services including helping you to set up:
-Wholly Foreign Owned Enterprises (WFOE )
-Representative Offices
-Joint Ventures (Equity/Co-operative)
-Foreign Invested Partnership Enterprises
(FIPE)
-Hong Kong Holding Company
Please visit Http://www.tommyconsulting.com
Email: tomlee@tommyconsulting.com, Skype:
tomleeli
WhatSapp/Wechat/Cell Phone: +86 18926401128
