Business Consulting Services

What organization can establish a wholly foreign-owned enterprise?

Both foreigners-individuals and corporate entities can set up wholly foreign-owned enterprises (WFOE) in China.

Is it necessary to have already established foreign company in order to establish a wholly foreign-owned enterprise in China?

No. The investor could be an individual.

Can the investment in WFOE be a joint between a foreign individual and a foreign company?

Yes.

Can a new foreign individual or company become a shareholder after the establishment of a wholly foreign-owned enterprise?

Yes.

Are there any requirements for investor’s salary?

There is no regulated minimum for investor’s salary. All shareholders could receive dividends when the company is in profit.

What is the absolute minimum capital requirement under Chinese law for a wholly foreign-owned enterprise?

According to Article 26 of the company’s registration law, the registered capital of the limited liability company is the amount of capital registered by all shareholders in front of the company registration authority.

Where the laws, administrative regulations and the state council decide to provide for the registered capital of the limited liability company and the minimum amount of the registered capital, the provisions shall prevail. Thus, according to the revised new company law, except otherwise stipulated by the situation, not only change the registration system, the company's registered capital and cancelled on the shareholders of a company shall, after the company was founded two years or five years in paid-up capital contribution and the minimum limit of registered capital, etc. At the same time, the shareholders of the company may voluntarily agree to pay the amount of capital contribution, the method of contribution, the period of contribution, etc., and record the articles of association of the company.

At the same time, the company shareholders can independently agree to pay the amount of capital contribution, the mode of investment, the period of investment, and recorded in the company's Articles of association.

Is it necessary that the registered capital is injected fully or it can be injected in phases?

According to the company registration law, since a WFOE is a type of limited liability company, it requires the injection of foreign funds to make-up the registered capital, though the registered capital could be a paid by instalments. However, the first capital should not be less than 15% of the total investment, and registered capital amount should be no less than 30,000 CNY. The first capital must be injected in a period of three months since the date the company is established according to one’s Business License, the rest capital should be injected in a period of 2 years. If you need to learn more about the period of payment of the registered capital and the increase and decrease of funds, please contact us.

What are the differences and connections between registered capital and total investment?

Total investment is the sum of assets invested by the company in the process of production and operation, that is, the sum of loan capital and registered capital. The registered capital of a limited liability company shall be the amount of capital paid by all shareholders registered in the Company’s Business License. The company's liability to third parties is limited to the amount of registered capital. To prevent the trend of weakening capital, the Chinese country has limited the proportion of registered capital and total investment.

What is the consulting service fee to set up a WFOE?

Our service charge depends on the service requested by client during one’s business set up. We calculate the service payment according to the actual work done.

Does your service fee include all the fees or there are other charges?

We assist clients in preparing the company's application documentation according to the documents provided by our clients. All documents required to be submitted to the Government must be in Chinese.In addition to the basic service charge, if the clients request all submitted documents to be bilingual, we will charge an additional translation fee. Our service charges are not included in the government fees. Government fees vary from client to client; we will prepay the government fee on account of our client a provide government receipts for payment back.Other services related to the company’s set up such as proposals for office’s rent, recruitment, etc., will be charged separately.

What’s meant by “government fee”?

Government fees include, but are not limited to, charges regarding chop/seal, taxes on rent contracts, cost of various certificates and management fees.The total government fee for a WFOE is about RMB 2000.

How long does it take whole process to set up a company?

It usually takes around two months to obtain the Business license and all other necessary licenses to operate a business.If the foreign investment enterprise’s business scope is part of restricted industry, it will take much longer time to obtain the approval of the relevant institutions.

If the company has not been established yet, how could we rent an office under the company’s name?

You may first approve the name of the company you wish to establish at the relevant institutions, and then you can sign up an office lease agreement under the approved company name.

Is there any use to keep the existing representative office if a wholly-owned company has been set up?

If a wholly-owned company is operating well, the representative office could be canceled. If the representative office is taxed on the basis of profit method, we would recommend the cancellation of the representative office.If the other ways of taxation are applied, WOFE may decide whether or not to retain the representative office.

What are the obligatory costs in order to operate a foreign-funded enterprise?

Typically, the main expenses include office rent, utilities, employer’s salary, office equipment, etc.

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