China is the world’s second largest economy. The world’s largest exporter and is also one of the top 5 fastest growing economy in 2015.
There are 2 ways to register business in China – by way of Representative Office [RO] and that of Wholly Foreign Owned Enterprise [WFOE].
Please note that different province / city have slightly different requirements.
Generally the processes for both the ROe and WFOE are quite similar in order to register business in China.
Summary of Processes of RO and WFOE
Step 1: Get the necessary documents in place. Documents include among others, Certification of incorporation, Bank credit letter, Appointment letter, Authorization letter of signatories, Articles of incorporation and Leasing contract.
Step 2: The documents should be notarized and in Chinese language.
Step 3: It takes about 1 to 2 months of processing time before approval is granted.
Step 4: There is a need for a 1 year [some places – 6 months] leasing contract in place prior to submission of documents for approval.
Step 5: The process for setting up the business in China include among others, applying for a business license, registering the company seals, applying for an organization code certificate, applying for tax registration certificates, opening of a bank account and handling statistics registration matters.
Step 6: The major differences between a RO and WFOE are:
Time for RO approval is shorter than that of WFOE.
Duration of operations approved is 3 years for RO and more than 20 years for WFOE.
No minimum capital is required for RO while registered capital is required for WFOE.
RO is not allow to issue invoices [i.e. no sales] while WFOE is allowed.
RO is not allow to hire staff on its own while WFOE is allowed.
RO tax is based on expenses while WFOE tax is similar to those ordinary companies.
Step 7: Different industries [service, trading or manufacturing] have different requirements.