Saturday, July 21, 2018

Set-Up WFOE Company

wfoeChinese economic development has mainly occurred in all those areas of China which are known as "Special Economic Zones - Free Zones in China". The largest one is the Free Zone of Pearl River Delta, which rules Hong Kong, Shenzhen, Guangzhou and Macau. These areas benefit from positive economic policies, tax benefits and customized government measures, allowing to manage any business in a more productive way than the rest of the Country and to attract foreign investors wishing to invest in China towards all its strategic sectors (i.e. environmental safeguard, agriculture development, infrastructure and transportation, high-tech and hydro- resources conservation).

Chinese investment system was modified as a result of two reforms (as China has been a member of the World Trade Organization - WTO - since December, 2001). It is a real response to an opening up and freeing process by its Chinese regime in order to help international business that covers a large share of the overall economy in China and it stands for a real chance for foreign investors in order to establish a WFOE (i.e. Wholly Foreign Owned Enterprise).

For foreign investors, setting up a WFOE means reaching a good solution to any issue in order to cooperate with Joint-Venture's Chinese partners for a lot of reasons, e.g. any matter regarding to financial goals, any joint management issue, any problem regarding to technology data protection.

These are all good reasons to understand why foreign investors establish WFOEs or turn established Joint-Ventures into WFOEs in order to seize any opportunity in China and in its Chinese market.

Setting up a WFOE means starting up a permanent business in China, thus benefiting from any advantage of a limited liability company, which can turn into a Chinese LLC (Limited Liability Company) or a one-person Chinese LLC, which is a sole shareholder kind of corporate establishment.

A WFOE company can be 100% foreign-owned (thus with no Chinese partners), it may be of short-term duration, linked to the nature of its purpose (between fifteen and thirty years) and subjected to government permits neither for trading nor for international business.

Chinese law has issued specific rules and it requires different start up capital amounts, thanks to WFOE's particular corporate kind of establishment.

A WFOE's start up capital amount is theoretical, as it depends on the type of project. Moreover, it is tied down both to a minimum value and the actual cash requirement need, in order to understand the right implementation of that particular investment and how to manage a business in China until this business is, indeed, even (e.g. in Shanghai, investment with registered capital of less than 135 to 180,000 euros are rarely authorized).

A WFOE is a great example of doing good business in China. It is very attractive for foreign investors thanks to its flexible structure, which is defined in its corporate charter's articles that have been drawn up according to the kind of business a WFOE should carry out.

It is important to mark that Bright Business Consulting LLP (BBC-LLP) is a leading company of internationalization strategy, as well as the best advisor in order to know the proper way to start up a business in China, how to invest in China and how to establish companies - establishing a company in China.

BBC-LLP offers a first consultancy for freeFirst Meeting* - to anyone wishing to start a process of internationalization involving China or to establish a WFOE.



Bright Business Consulting LLP
58/60 - Kensington Church Street


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