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Shanghai Company Formation (WFOE)

Updated:2020-7-28 16:15:26    Source:www.tannet-group.comViews:1416

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Shanghai company formation (WFOE) is one kind of company registration in Shanghai. As the largest and most prosperous city in China, Shanghai is the economic, financial and cultural center of China, while Beijing is the political heart. This image of Shanghai as a fast and modern metropolis is certainly the one that most visitors and investors values.

Different Types of WFOE
There are different types of WFOE. Generally speaking,
(1) If the WFOE only be allowed to manufacture here. We can say it's manufacturing WFOE.
(2) If the WFOE is allowed to do Consulting & Service, we call them Consulting WFOE.
(3) If the WFOE is allowed to do Trading, Wholesale, Retail or Franchise in China, we call them Trading WFOE or FICE (Foreign-Invested Commercial Enterprise)

Advantages of WFOE
The advantages of incorporation a WFOE, compared with other types of enterprises, include, but not limited to:
(1) Independence and freedom to implement the worldwide strategies of its parent company without having to consider the involvement of the Chinese partner;
(2) Ability to formally carry out business rather than just function as a representative office and being able to issue invoices to their customers in RMB and receive revenues in RMB;
(3) Capability of converting RMB profits to US dollars for remittance to its parent company outside of China;
(4) Protection of intellectual know-how and technology;
(5) For Manufacturing WFOE, no special requirements for Import / Export license for its own products;
(6) Full control of human resources
(7) Greater efficiency in operations, management and future development.

WFOE Registration Procedures
Step 1: Application for approval of intended investment activities (project proposal)
The examination and approval authority shall reply within 20 days on receipt of the proposal.

Step 2: Application for intended name to be used by the WFOE with the Shanghai
Administrative Bureau for industry and Commerce

Step 3: Application for the approval of feasibility study, constitution (memorandum and articles of association)
A feasibility study will be prepared covering financing, site selection, technological process, equipments, raw material supply, market survey, economic results, foreign exchange, infrastructure facilities, etc. Articles of Association should be prepared and submitted to the examination and approval authority. The examination and approval authority shall reply within 30 days on receipt of the feasibility study report and articles of association.

After the feasibility study report and articles of association have been approved, the applicant shall apply to the examination and approval authority, which shall issue the Approval Certificate within 3 days after receiving the application.

Step 4: Registration with the Administration for Industry and Commerce.
The company may then register with Shanghai Administrative Bureau for Industry and Commerce within 30 days after receiving the Approval Certificate and apply for the business licence. Shanghai Administrative Bureau for Industry and Commerce shall issue the business licence within 10 working days to those projects approved by the examination and approval authority of Shanghai. The enterprise is deemed as established on the date when the business licence is issued. The foreign enterprise may engage an agent authorized by Shanghai Municipal Foreign Economic Relations and Trade Committee to handle its application on its behalf.

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