NewsCase StudiesEvents

Business In China Explained: Wholly Foreign Owned Enterprises

Also in the news...

Doing Business in South Korea: Managing Cultural Differences

Koreans will not expect you to be an expert on the nuances of their culture, but they will appreciate a show of interest in matters that are important to them. Often what is most valued by Koreans involves the ability to build influential relationships and skilfully navigate hierarchy

Total moves it’s financial headquarters to London.

In order to get a little closer to the international market, the kind of market valued by major global firms, the French oil giant Total is in the process of moving its management financial personnel to London; a move confirmed by a firm’s spokesperson to Reuters.

Effective Cross Cultural Communication in the Workplace: Tips for Success

Working across cultures is usually more interesting, if not always more enjoyable, than if we were just doing business with our own nationality. It is most likely that many of “the ways we like to do business” are quite familiar among our cross-cultural colleagues and clients.

Chancellor uses trade trip to Brazil to hail further finance support to back British exporters

At the start of a three day trade trip to Brazil, the Chancellor of the Exchequer, the Rt Hon George Osborne MP, announced the next stage in the government’s fundamental overhaul of finance for British exporters.

Over 50% of FedEx Flights at Cologne Bonn Airport Use Ultra-Modern B777F

FedEx B777F deployed on even more routes: Effective immediately, FedEx will now operate 30 of its 58 weekly flights to and from Cologne Bonn Airport with the ultra-modern Boeing 777 (B777F) aircraft

Business In China Explained: Wholly Foreign Owned Enterprises

Back to News

This form of set-up is becoming increasingly more popular with investors, due its nature of maximum control: there is no prerequisite involvement from Chinese investors.

Wholly Foreign Owned Enterprises (WFOE) are, in essence, limited liability companies set-up in China through foreign investment exclusively. This form of set-up is becoming increasingly more popular with investors, due its nature of maximum control: there is no prerequisite involvement from Chinese investors.

However, the permission to establish a WFOE is seldom granted in comparison to Joint Ventures.

They are generally only allowed if the nature of business mean either half the yearly output is exported, or if operations depend heavily on contemporary technology that is beneficial to China.

As with Joint Ventures, WFOEs generally need to balance their foreign exchange and are permitted to operate in facilities aside from those regulated by the Foreign Management Bureau. As a licit entity in China, a WFOE is allowed to sign separate contracts with the Chinese government, which enables the right to rent buildings, use land and benefit from utility services.

The independence from external Chinese control may seem good, but is also perhaps why so many fail: there is no Chinese partner to help you through the process, such as government approval, regulatory issues, logistics, etc. Likewise, when it comes to forging the necessary relationships which help accelerate profits, you'll be out there on your own, starting from scratch.

Other factors that must be weighed against your company's sovereignty include Chinese labour. Different locations will have different rulings, but all are similar in intention: your company may be required to employ nationals.

The registration capital required also varies for a WFOE. It depends on the type of venture you intend to set up and the location you choose to do so. The minimum amount, however, is RMB 1,000,000 (approx 」85,000).

Another facet to consider is your business scope: if you deicide to follow other pursuits, contrary to those outlined when applying for your business license, you first have to obtain permission from the Chinese authorities.

It's a paradox: being constrained by freedom. And it's a hefty choice to make. Will you relinquish some control for the benefits of a local partner, or retain complete control with a WFOE and run the risk falling at the first hurdles?

Investigate Joint Ventures and Representative Offices before making any rash decision.

You are not logged in!

Please login or register to ask our experts a question.

Login now or register.