Process of Opening a Chinese WFOE

Starting your own WFOE (Wholly Foreign Owned Entity) in China is rather complex, costly, and takes around 2- 4 months – so know this upfront! First, you should find a reliable lawyer in China, in the city you intend to operate (I opened in Shenzhen)

I can’t remember how many government and other fees I paid, i had to get a notary from the Hong Kong government to show my HK company was opening the WFOE, and that cost me around 4700hkd if I remember correctly. Then there were tons of smaller fees to government and banks, which I would guestimate were around 5-7k rmb. Then you will have to buy special accounting software for monthly filing, and have an accounting company or person file for you – accountants, if a firm, are around 500rmb / mo, if you want a personal accountant they are more like 1000rmb/mo.

For injected capital, its a min of 100,000rmb (at least in 2008 it was, I hear it has gone up since then) – I was giong to do more, but Li Yan suggested to do the least possible and to keep your funds outside of China (ie Hong Kong) or in RMB cash in personal accounts. But this is advice from 2 years ago, laws, regulations, and “Tactics” may have changed – she is a cool straight up lawyer that would be worth at least a consultation for ya, but many of my other friends have used her and been happy too.

The main purposes for opening a WFOE vs only operating a HK company are:

1) hiring staff “outright” – you can hire through a rep office, but the worker technically works for the Chinese government and you pay a labor department

2) selling in China – if you intend to collect RMB and issue fa piao (chinese receipts)

Once the process is completed, it will make your business life in China much more streamlined. If you would like to contact me, Mike Michelini here at Shadstone Sourcing, and I’ll try to help you out, or refer you to a lawyer in the Chinese city you’re interested in opening up a company!