Advantages of a Wholly Foreign-Owned Enterprise

• No involvement of a Chinese partner thus leading to complete independence on how to run your own business and a higher level of efficiency in the daily operations
• Unlike a RO it is possible for a WFOE to issue invoices and to receive payment in RMB
• No risk of your intellectual property being stolen by your joint venture partner

Establishing a Wholly Foreign-Owned Enterprise

If a foreign company wants to establish a WFOE, it will first have to reserve a name for the company with the SAIC (The so-called pre-registration of a name).

Approval

After having reserved the name for the WFOE, certain documents have to be submitted to the approval authorities in the area where one intends to open the company. They are the following:

A project proposal which should contain the following points:

• - The purpose, scope of business, scale of operation and production plan of the WFOE
  - The technology, equipment, public facilities and sites that will be used
  - The financing of the project, the forecasts and evaluations as well as the wages of the personnel

• A written application letter for the establishment of a WFOE, along with a feasibility study report, proof of the pre-registration of the company name with the SAIC as well as an office lease agreement
• A list of the members of the board of directors, including the proposed chairperson, and their respective appointment letters
• Document of incorporation as well as a credit certificate of the WOFE investor
• The articles of association of the company

Once the approval authorities have received all the necessary documents, they have 90 days during which they will have to decide whether or not they will grant the approval to establish a WFOE. The actual decision is, however, often given within 30 days.

Registration

Within 30 days of having received the Approval Certificate, the foreign investor will have to go to the SAIC to register and apply for a business license. This license has to be issued within 30 days. After the registration with the SAIC has been completed the company should take care of its registration with tax authorities, banks, etc.

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