Company Incorporation in China. What is A WFOE?

WFOE is a Wholly Foreign Owned Enterprise, which is a limited liability company fully owned by foreign investors.

In China WFOEs were originally conceived for encouraging manufacturing activities that were export oriented or introducing advanced technology. However, with China’s entry into the WTO, these conditioned were extended, and now a WFOE is increasingly being used for service providers (consulting, management, software development, trading and more).

WHAT ARE THE RESTRICTIONS ON SERVICES FOR A WFOE IN CHINA?

Wholly Foreign Owned Enterprises in China are allowed to engage in business activities, outlined in the Articles of Association and Business License.

Business scope in narrowly defined for all types of enterprises in China and the WFOE can only do business within its defined business scope, which appears in the business license. Any changes to the business scope require additional applications and approval.

General business scope usually includes: investment consulting, international economic consulting, trade information consulting, marketing and promotion consulting,  technology consulting, manufacturing, trading and so on.

ARE THERE ANY RESTRICTIONS TO NAMING A WFOE?

Your company’s name will need a pre-approval. It is possible to reserve a name of the proposed WFOE for a long as six months. You should also check that there is no similar or identical name on the register.