Three Distinct Wholly Foreign-owned Enterprise Set up in China

Update time:2016-02-24  source:

There are three distinct WFOE setups:


Service (or Consulting) WFOE;


Trading WFOE (or Foreign-invested Commercial Enterprise, “FICE”)


Manufacturing WFOE.

 

While all three structures share the same legal identity, they differ significantly in terms of setup procedures, costs and the range of commercial activities in which they are allowed to engage.


Trading WFOEs and Manufacturing WFOEs must derive the majority of their revenue from that main business, but can also provide associated services.


Meanwhile, some Service WFOEs can also conduct trading activities related to their services.


When applying to set up a WFOE, the business scope must be specified in the application.


The business scope is a one sentence description of the business activities in which a business will engage, and will appear on the business license.


Note that the WFOE can only conduct business activities within its business scope and any amendments to the business scope require further application and approval, and can be quite time consuming. We include examples of the business scope for each WFOE setup below.


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