It can be very tricky to create a WFOE in China if you don’t understand the exact rules of the Chinese WFOE policy. From choosing the location, deciding the business scope and registered capital, tax planning, to intellectual property strategy, every step should be taken into consideration carefully. Here are 3 common problems you should especially take care of.

 

Business scope

The WFOE should describe its business scope precisely and properly in one sentence. The process is long, involves many authorities, and it is easy to make mistakes. Some companies may include the prohibited foreign investment activities in their business scope if they don’t read the policies through, which may lead to the failure of the application. In some case, some companies want to change their business scopes, and it will be also very challenging and time-consuming, lasting several months.

You must be very familiar with the Foreign Investment Industries Guidance Catalogue if you don’t want to make such mistakes. To save your time, INS offer insights on deciding and writing a proper business scope, and help your business run well in the long run.

 

Registered capital   

There is no fixed rule for the minimum registered capital. However, injecting less registered capital can result in severe cash flow challenges and injecting to much will lead to idle funds and missed opportunities. So it’s significant to estimate your capital requirements for WFOE properly.

 

The sufficient amount of capital varies based on such factors as the WFOE’s industry, the region of incorporation, among others. INS has summarized the typical registered capital for WFOEs in different industries and will offer you our best solution.

 

Intellectual property

China follows a ‘first-to-file’ policy regarding intellectual property rights (IPR) and some investors may have already filed the IPR. Hence the first step to entering the Chinese market would involve checking and registering your trademark and intellectually property with the appropriate authorities. Failure to do so will jeopardize your business.

To avoid such failure and help your business hit the Chinese market, INS will guide you in the first place and get your trade mark and intellectual property registered in China as soon as possible.