What a WFOE is
A wholly foreign-owned enterprise (WFOE, 外商独资企业) is a limited liability company in mainland China that is owned entirely by one or more foreign investors. Since the Foreign Investment Law took effect in 2020, WFOEs are governed by the same PRC Company Law as domestic companies, so the rules on governance and capital are the same.
A WFOE is the usual choice when you want to:
- invoice Chinese customers in RMB and issue official invoices (fapiao)
- hire local employees directly
- hold trademarks, patents and other IP in China
- receive payments and repatriate profits to your parent company
Requirements
| Requirement | What it means in practice |
|---|---|
| Shareholder | A foreign company or a foreign individual |
| Legal representative | A director or manager appointed by you. This person has real legal responsibility, so choose carefully |
| Supervisor | Usually required; we advise on the lightest compliant structure for your company size |
| Registered address | A commercial lease in the district where you register |
| Business scope | Chosen from the official catalogue. Your activities must fall within it |
| Registered capital | No general minimum, but it must be paid in within five years |
| Beneficial ownership | Individuals who own or control 25% or more must be filed at incorporation |
Registered capital under the 2024 Company Law
The revised PRC Company Law took effect on 1 July 2024. Shareholders of a limited liability company must pay in their subscribed capital within five years of incorporation. The old practice of setting a large capital figure with a 20- or 30-year payment schedule no longer works.
We set capital by looking at your first 18–24 months of costs (rent, payroll and working capital) and the expectations of banks and licensing authorities. Too little capital can stall the company; too much creates a legal obligation you have to fund.
Timeline
A service or consulting WFOE usually takes 8–14 weeks from signed engagement to issuing your first invoice. Trading and manufacturing WFOEs can take longer when additional permits are needed. Opening the bank account is normally the longest single step.
Documents we need from you
- Certificate of incorporation of the parent company, or the passport of an individual investor
- Passports of the proposed legal representative and supervisor
- Details of the ultimate beneficial owners
- A short description of the planned business activities
Most countries are now parties to the Apostille Convention, which China joined in November 2023. That means foreign documents need an apostille instead of consular legalisation.
Tax at a glance
- Corporate income tax: 25% standard. Qualifying small low-profit enterprises pay an effective 5% until 31 December 2027, and certified high and new technology enterprises pay 15%.
- VAT: 13%, 9% or 6% depending on the activity under the VAT Law in force since 1 January 2026. Small-scale taxpayers pay 1% until the end of 2027.
- Dividends to a foreign parent: 10% withholding tax, often reduced under a double tax treaty.
How we work
You get a fixed written quote within one business day and one named PRC lawyer who stays on your file. We draft every document in both English and Chinese, file everything remotely, and confirm each completed step to you in writing. Once the company is operating, we can stay on as its lawyers and accountants.
Step by step
- Days 1–5
Structure & name
We check the Negative List, set registered capital and business scope, and reserve the Chinese company name.
- Days 5–20
Documents
Your parent company's documents are notarised and apostilled at home. We draft the articles of association in Chinese and English.
- Days 20–30
Business licence
The local SAMR bureau issues the business licence and the 18-digit Unified Social Credit Code.
- Days 30–33
Company chops
Official, finance, legal-representative, contract and invoice seals are carved and filed with the Public Security Bureau.
- Days 33–75
Bank accounts
We open the RMB basic account and the foreign-currency capital account, including the bank's verification step.
- Days 60–90
Tax & first fapiao
Tax registration, VAT taxpayer status, the digital invoicing account and your first official invoice.
Frequently asked questions
Is there a minimum registered capital for a WFOE?
Not in most sectors. There is no general statutory minimum, but the amount must be realistic for your business plan. Under the revised Company Law it must be fully paid in within five years of incorporation, so we recommend an amount you can actually fund. Some regulated sectors, such as finance, have their own minimums.
Do I need to travel to China to set up a WFOE?
No. Documents are signed and apostilled in your home country, and we file everything on your behalf. Some banks ask the legal representative to verify identity; many now accept a video call, and we arrange this for you.
Can a WFOE be owned by an individual rather than a company?
Yes. A foreign individual can be the sole shareholder. Many investors instead hold the WFOE through a Hong Kong company for treaty benefits on dividends and easier exits.
What ongoing compliance does a WFOE have?
Monthly bookkeeping and tax filings, an annual audit, the annual corporate income tax reconciliation, the annual report to SAMR, and keeping beneficial-ownership information up to date. We can handle all of this as your company's counsel and accountant.
Which activities are closed to a WFOE?
Sectors listed on the national Foreign Investment Negative List (2024 edition, 29 items) are either prohibited or require a Chinese partner. Most trading, consulting, technology and manufacturing activities are open to 100% foreign ownership.