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Hainan Company Formation: Types of WFOE

Updated:2018-11-26 16:48:47    Source:www.tannet-group.comViews:569

Hainan company formation can be achieved in the form of the WFOE. The term WFOE refers to Wholly Foreign Owned Enterprise in full. Many foreign investors choose to setup a WFOE to leverage more control over their business operations. This types of business form provides greater control, ownership and operation freedom to foreign investors, which is why more and more foreign companies want to explore this option. Below are the common types of WFOE available to foreign investors.

I. Consulting WFOE
Consulting businesses are categorized under the consulting or services sector. This the most basic type of WFOE, which has fewer registration formalities, legal approvals and documentations, compared to its counterparts. Meaning, your consulting WFOE can be operational in China, within 2 to 4 months.

Another important aspect to keep in mind, when setting up a consulting firm is the scope of its business. Avoid limiting yourself to certain services, keep future growth and expansion prospects in mind, when identifying your scope in the business plan. The Chinese government will not allow you to participate in activities not included within the business scope, earlier approved by the local authorities.

II. Manufacturing WFOE
WFOEs can also enter the manufacturing sector by adhering to certain business requirements, registration process and local and state approval. In order to operate in the manufacturing sector, foreign investors need to scout a property for the production facility.

Find the most suitable spot for establishing your factory. Sign a lease agreement with the landlord. Add a clause in the leasing agreement stating that the down payment must be returned, if the registration application to establish a WFOE is rejected.

Once government approval is acquired on the location, apply for permits essential to your business operations. Lastly, get your production facility and equipment approved for production by a third-party. The third-party will issue a detailed Environmental Impact Assessment Report for your factory. Submit this report along with other necessary documents to the local and state authorities to get your business license issued.

III. Trading WFOE
Trading WFOE is also known as FICE or Foreign Invested Commercial Enterprise. The business scope of such companies is limited to trading of products as a wholesaler or retailer. Businesses can either export goods from China or sell them to customers located outside China or sell imported goods to the Chinese customers. This makes it an ideal option for foreign investors who want to sell a dynamic product within or outside of China.

Despite the fact that WFOE is the most popular option for foreign expats to set up businesss in China, the registration process may be difficult, as most of the paperwork is in Mandarin and requires countless approvals from local and state authorities. Tannet can take care of the whole process for you. Should you need other services, such as bank account opening, accounting and tax filing, trademark registration, etc. We can also help.

Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to You are also welcome to visit our office situated at:
(1) 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China;
(2) Unit702-703, 7/F, Fourseas Bldg, 208-212, Nathan Rd, Jordan, Hong Kong;
(3) Unit 610, 6/F, Huaxia Bank Tower, No. 61 Guoxing Avenue, Meilan Dist., Haikou, Hainan, China.

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