Navigating China’s Government Departments during WFOE Registration

When registering a Wholly Foreign-Owned Enterprise (WFOE) in China, one will interact with several government departments. These departments each have a role in different stages of the WFOE registration process, ensuring compliance with Chinese laws and regulations.

1. State Administration for Market Regulation (SAMR, 国家市场监督管理总局): SAMR is responsible for the company registration process. They oversee the approval of the company name and issue the business license once the WFOE formation is complete.

2. Public Security Bureau (PSB, 公安局): The PSB is responsible for the production and issuance of company seals, which are crucial for any company operating in China.

3. Local Office of the State Taxation Administration (STA, 国家税务总局): The local STA office is responsible for issuing the Tax Registration Certificate to the WFOE. They are also in charge of ongoing tax-related matters.

4. Foreign Exchange Administration (SAFE, 国家外汇管理局): SAFE issues the Certificate of Registration of Foreign Currency for the WFOE, overseeing all foreign exchange-related matters.

5. Customs (海关总署): If the WFOE is involved in import and export activities, it must be registered with the Customs for an Import-Export Code.

Above these government organs, the central government departments supervising their functions include:

1. The State Council (国务院): As the chief administrative authority in China, the State Council oversees the work of all government departments and formulates national policy.

2. Ministry of Commerce (MOFCOM, 商务部): MOFCOM supervises foreign trade and investment, including the establishment of WFOEs. It indirectly oversees the WFOE registration process through its control of SAMR.

3. National Development and Reform Commission (NDRC, 国家发展和改革委员会): The NDRC guides the overall economic system reform and maintains the balance of economic development. It also indirectly influences the process of setting up WFOEs in China.

The process of setting up a WFOE in China involves multiple government departments, each playing its unique role. Understanding their functions can provide a clearer picture of the steps involved and help businesses plan their entry into the Chinese market more effectively.

With JR & Firm’s expertise and deep understanding of the Chinese market, we can guide you through the maze of government departments involved in registering your WFOE, ensuring a smooth and hassle-free process.

Registering a WFOE in China as foreigner

Embarking on a venture in China can be an exciting prospect, but it can also be quite complex, particularly when considering the establishment of a Wholly Foreign-Owned Enterprise (WFOE). As a fully foreign-owned and capitalized business structure, a WFOE offers numerous advantages, such as full control over your business operations and the protection of intellectual property rights. However, the process to establish a WFOE, and the legal and business environment it operates in, often elicits a plethora of questions. In the following Frequently Asked Questions (FAQs) section, we aim to shed light on some of the most common queries related to setting up a WFOE in China, giving you a clearer understanding of what to expect when navigating this particular path in your international business journey.

1. What is the first step if I want to register a WFOE?

The first step towards registering a WFOE in China involves contacting a professional consultancy firm, such as JR & Firm, and signing a service agreement. In theory, the founders could handle the process themselves. However, since it requires an in-depth understanding of the company registration system and proficiency in Mandarin Chinese, it is generally more practical to hire a professional company to prevent potential mistakes during the process.

2. I have signed a service agreement with JR & Firm to register my WFOE, what's next?

After signing an agreement with our clients for WFOE registration in China, we issue a formal invoice. At this stage, we anticipate that our clients will make a payment for the service, allowing us to commence the process.

3. I have paid JR & Firm for the WFOE registration service, what should I do next?

Upon receiving full payment for the WFOE registration, we provide our clients with a detailed questionnaire. This document requests all the necessary information about the company, business activity, founders (shareholders), and executives (including the company director and supervisor). We request that our clients complete the questionnaire and return it to us via email.

4. What should I prepare for the WFOE registration questionnaire?

1. Company Name Choices: In China, WFOE names should follow this structure: [Place of Registration] + [Chosen Name] + [Business Direction] + Co., LTD. For example, Shanghai Silk Road International Trading Co., LTD, or for a consultancy company: Shanghai Silk Road Consulting Co., LTD. An alternative structure is: [Chosen Name] + [(Place of Registration)] + [Business Direction] + Co., LTD. For example: Silk Road (Shanghai) International Trading Co., LTD. Please note, in China, a company’s Chinese name is considered its main name. If our clients know Chinese, we ask for name choices in both Chinese and English, following the above structure. If not, English name choices will suffice, and we will select a corresponding Chinese name based on similar sounds. Avoid city, country, and historical names, as they’re typically disallowed. Also, we discourage direct translations of the English name due to high likelihood of them being taken. We recommend selecting similar-sounding Chinese characters to avoid delays. The Chinese name does not need to have a specific meaning, as meaningful characters are often taken.

2. Company’s Legal Person (Company Director): The legal person is an individual and cannot be a corporate entity. Please prepare their full name (as on the passport), a copy of their passport (not ID), along with their address, phone number, and email address.

3. Company’s Supervisor: The company supervisor is a separate individual from the company director, meaning they cannot be the same person. Please provide their full name (as on the passport), a copy of their passport (not ID), and their address, phone number, and email address.

4. Company’s Shareholder(s): Shareholders are the owners of the company and can be both individuals or corporate entities. Both the company director and supervisor can be shareholders. There can be up to 50 shareholders. Whether an individual or corporate shareholder, full information is required: full names, contact details, address, and either passport copies (for individual shareholders) or a full set of company documents (for corporate shareholders).

5. Company’s Business Activity: What products and/or services does the company plan to sell? Please prepare a detailed list.

6. Company’s Registered Capital: The registered capital is the amount the founders plan to invest in the company over a span of 30 years or more. The amount varies depending on the activity and place of registration. We recommend $300,000 for international trading companies and $100,000 for consultancy companies, as examples. The registered capital amount is usually suggested by the local government.

7. Full Contact Details for All Involved Executives and Shareholders: We need the complete contact details for all executives and shareholders. This includes addresses, emails, and phone numbers.

5. I submitted the WFOE registration questionnaire to JR & Firm via email, what's next?

Once we receive the completed WFOE registration questionnaire, we review it carefully and follow up with our clients accordingly. If there’s any missing information, or if the company requires additional permits or licenses based on its planned products or services, we will inform the client. If everything is in order, we prepare the application documents, attach our clients’ documentation, and submit the WFOE registration application. The estimated waiting period for feedback from the government on the registration application is approximately 10 business days. Please note that timeframes in China are approximate due to government bureaucracy.

6. How long does it take to get my WFOE license after the registration application is submitted?

Once the WFOE registration application is submitted, the government generally responds within 10 business days. If approved, they will issue the company’s structural documents, which the founders (shareholders) and executives (director and supervisor) are required to sign with a black gel pen and mail back to us (Note: In China, only black gel pens are acceptable for signing legal documents; other colors and ballpoint pens are not accepted). We then submit the signed documents to the company registrar and await the business license. The waiting period for the business license is roughly 10 business days unless expedited service was purchased. With expedited service, a business license can be obtained within 2-5 business days. Contact us for more details about the expedited service.

7. Great, I have obtained my WFOE business license, what is the next step?

Once we secure the WFOE business license, we will contact our clients and the bank to schedule an appointment to open a corporate bank account for the company. Please note, the company director must be present in China to open a corporate bank account and their citizenship should not be among the countries sanctioned in the bank’s system. Alongside being present, the director needs to provide a Chinese phone number linked to their passport and a second person’s passport and phone number linked to this second person’s passport. This second person can be anyone in China (provided their citizenship isn’t among the sanctioned countries) with a Chinese phone number. This requirement is due to the banks’ need to issue online banking devices that require two people’s information. Legally speaking, this second person doesn’t have any rights or obligations regarding the company’s finances or bank account. While this might seem unusual, it remains a requirement, so we advise clients to identify such an individual in China before opening a bank account. The bank account opening process takes around 5-6 hours, and we recommend our clients exercise patience during this process.

8. I have my WFOE bank account opened, what is the next step?

After your WFOE bank account is opened, we’ll proceed to contact the customs department to initiate the process for the e-port device (if you’re registering an international trading WFOE focused on import/export. Note that e-port isn’t required for consultancy or other types of companies). This process typically takes about 5 business days, and we’ll mail the e-port device to our clients once it’s secured.

9. I have obtained my e-port device, are there any other steps to be completed before I start my company’s operations?

Yes, following the acquisition of the e-port for the WFOE, we’ll register the company with the tax department. This process generally takes around 14 business days, and it requires the company director to visit the tax office in person for ID verification.

10. After the WFOE tax registration, are there any other steps involved before the company becomes active?

Indeed, the final step in the WFOE registration is the foreign currency permission application. This process typically takes around 7 business days and necessitates a visit to the relevant government department. After securing the foreign currency permission, the WFOE can commence its operations.

On the whole, the complete process for WFOE registration can span anywhere between 4 and 8 weeks. As we mentioned earlier, all timeframes are approximations due to the inherent unpredictability of government bureaucracy. Although these factors are beyond our control, we will do our absolute best to expedite the process.

How to secure a work visa in China?

Explore expert tips on starting a business in China, securing work visas, and navigating company registration with our comprehensive FAQ guide.

Manufacturing in China through OEM or ODM – Which one is best?

Manufacturing in China – OEM or ODM – Access over 3000 Chinese factories, and get expert help in manufacturing, IP protection, and more with JR & Firm.

Important Terminology to Register and Maintain a Company in China

Explore essential terms for registering and maintaining a company in China. Navigate the legal landscape with expert insights and tips.

China Company Registration Made Easy

CHINA COMPANY REGISTRATION – SHANGHAI, 2024: Foreigners can register and own companies in China, known as WFOEs—Wholly Foreign-Owned Enterprises. A WFOE is a limited liability company and can be established for various business types. The most common include...

Hong Kong or Singapore – which one is better for company registration and why?

Explore the business advantages of Hong Kong and Singapore for companies dealing with Mainland China, including detailed tax insights and subsidiary management.

How Taxes Work in Hong Kong: A Practical Guide for Entrepreneurs and Businesses

Explore Hong Kong’s business-friendly tax system and how it aids in company formation and growth, especially for operations linked to Mainland China.

Chinese vs Hong Kong Company – Which one is better and why?

Discover the optimal choice for your business: Explore the advantages of setting up a company in Mainland China versus Hong Kong, and unlock the potential for success in the dynamic Asian market. Maximize your opportunities with expert insights on taxation, legal requirements, and market access strategies.

China Company Registration: Frequently Asked Questions for the Year 2023

As we approach 2024, our exploration of the intricacies of China Company Registration is fueled by the numerous FAQs that have shaped our journey throughout 2023. Whether you're navigating corporate compliance, exploring legal procedures, or seeking insights into the...

China Company Registration: How to Choose Company Name for your WFOE?

Unlock the potential of business success in China with expert insights on company registration. Discover key strategies and legal essentials with CEO Jasur Mavlyanov. Navigate Shanghai Silk Road opportunities seamlessly.

How to Get a Chinese Green Card: Shanghai’s New Policy Grants Immediate Green Cards to Expatriate PhD Holders.

Discover Shanghai’s new policy granting instant green cards to expat PhD holders. Breaking immigration barriers for academics. JR & Firm explains.

Jasur Mavlyanov, an experienced entrepreneur and legal expert, has built a notable career in international business, with a focus on China. With over 13 years of experience living and working in China, Mavlyanov has acquired valuable insights into the Chinese legal system and business environment.

As an entrepreneur, Jasur founded JR & Firm LLC, a company dedicated to providing legal services to global clients entering the Chinese market. His leadership has helped the firm become a reliable partner for businesses navigating the complexities of Chinese regulations and laws. READ MORE about Jasur.

error: Content is protected !!