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Understanding WFOE regulations

What is a WFOE?

A Wholly Foreign-Owned Enterprise (WFOE) is a limited company in China whose capital is entirely held by one or several foreign partners. It is the most commonly-used company structure for foreign investors entering the Chinese market. To facilitate this integration, INS Global Consulting has been assisting companies for over a decade in setting a WFOE company by providing consultancy solutions.

Types of WFOE

The Chinese Ministry of Commerce allows three types of WFOE:

  • The commercial WFOE, or FICE (Foreign-Invested Commercial Enterprise): which has the right to carry out commercial operations, to be involved in franchise contracts, to be a commercial wholesaler or retailer.
  • The manufacture WFOE: whose activities are limited to production. It can only manufacture in China.
  • The consultancy WFOE: which is designed for services and consulting operations.

Social capital

The social capital of a WFOE does not have an official minimum required by Chinese authorities, who examines financial resources depending on the type of WFOE and scope of its activities. Assessments are on a case-by-case basis. For a consultancy WFOE, it can be between 100,000 and 500,000 RMB, between 500,000 and 1 million for a commercial WFOE and over a million RMB for a manufacture WFOE.

Operating license

This document is essential for the effective launch of your business activity. This license, approved by the State Administration For Industry & Commerce (SAIC) allows you to open a RMB account and carry out foreign exchange transactions. It’s a prerequisite for signing contracts, recruitment and for different work and travel visa requests. Consultant specialists, such as INS Global Consulting, are familiar with the processes involved and can help you quickly obtain this operating license.

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