WFOE in China

A wholly foreign owned enterprise (WFOE) is a limited liability company that is owned exclusively by the foreign investor(s) within Chinese territory. They do include branches that are established in China by foreign enterprises or other foreign economic organizations. The services industry, including a variety of consulting and management services, software development and trading services, tend to use WFOEs.

Advantages of WFOEs

  • Establishing a WFOE allows the independence and freedom to implement strategies of the parent company without having to consider the involvement of a Chinese partner.
  • WFOEs are able to formally undertake business, rather than just functioning as a representative office.
  • Invoices are able to be issued to customers, and revenues can also be received, in Renminbi (RMB).
  • Profits can be converted from RMB to USD for remittance to the parent company outside of China.
  • Greater efficiency in operations, management and development of the company.
  • Complete control of human resources.
  • Protection of intellectual knowledge and technology.
  • Import/export license is not required for company’s own products.
The scope of the business is one of the most important issues in the application of a WFOE. The business scope must be clearly defined and business scope will appear on the business license. The business can then only undertake business which is within the approved business scope.  Generally, business scope includes a range of businesses from investment consulting, international economic consulting, trade information consulting, marketing and promotion consulting, corporate management consulting, technology consulting and manufacturing, among others. 

 China’s entry into the WTO has meant that an increasing number of businesses are now open to a WFOE, especially in businesses relating to trading, wholesale and retail.

To find more about other popular ways of Incorporation  in China please visit

Joint venture in China Read more 

Representative Office in China Read more

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