China is an investment paradise. The efforts of the country’s administration to grow the economy and make it the best are finally bearing results. Today, China’s GDP is only second to that of the United States. With the current growth momentum, China’s economy is expected to surpass that of the United States by 2028. From an economic viewpoint, China is a destination ready for investors, and many are those who have noted the opportunity.
If you have a good business idea or the company back home is performing poorly and want to push it into a global multinational, it is time to consider opening a wholly foreign-owned enterprise (WFOE) in China. In this post, we take a closer look at China WFOE formation to demonstrate why you should work with experts.
A Closer Look at WFOE
WFOE (shortening for a wholly foreign-owned enterprise) is the commonest business structure used by foreigners in China. Unlike a joint venture (JV) that requires you to enter into a partnership with a Chinese, WFOEs allow foreigners to have 100% shareholding. This means that you are in charge of all the decisions about the company.
Benefits of a WFOE
- Unlike a representative office (RO), a WFOE is allowed to engage in profit-making deals.
- Decisions about the company and its operations can be made faster.
- You can move profits in and out of China with no restrictions.
- Low taxes for your company if it is based in free trade zones and away from coastal cities. If the company is in software development, the cost will be even lower.
- Your WFOE is considered a separate legal entity as a limited liability company. So, your personal assets cannot be seized in the event of a problem such as insolvency.
When you combine the benefits of a WFOE with the high potential of a country as an investment jurisdiction, they make it irresistible for entrepreneurs. However, the process of registering a WFOE is complex. As mentioned by Hawksford you are required to prepare a long list of documents, including the business scope, feasibility study, memorandum of association, and a lot more. Again, you have to deal with multiple offices, which can be pretty challenging, especially for a foreigner. The good thing is that there is a way out for China WFOE formation: using an agency of experts.
How China WFOE Formation with the help of Professionals Set’s it for Success
When you make the big decision to move to China, everything is thrown into a spin. You need to do a lot of consultations and research. If you will work with different shareholders, crafting agreements and forging a common front is never easy. But the biggest task is raising the required cash. As you handle all these tasks, it can be challenging to follow up with the China WFOE formation. This is why you need a professional. Here are the main ways that experts can help you to become successful:
- You are assisted in preparing the required documents for China WFOE formation.
- The experts understand the changing business policies in China and will ensure you are compliant.
- They can pick the top-notch legal representative for your company in China.
- The experts have helped other companies coming to China and can tell you what works and what does not.
- You can easily create the right strategies for your company’s entry and growth in China with the assistance of experts.
- As you focus on business growth, the experts will be there to assist with other processes, such as payroll, accounting, and filing tax returns.
- You can count on the experts to carry comprehensive due diligence for your company.
Registering for a WFOE in China is a great achievement, but it can be pretty challenging if you try to do it on your own. This is why you need to have an expert at your side. They specialize in company registration and post-registration services, and you can count on them for business success.
