Wholly Foreign-Owned Enterprise (WFOE)

A wholly foreign-owned enterprise is a business entity formed in China entirely with foreign capital. It is totally under foreign control and does not have any formal Chinese ownership participation. For a foreign company to be able to issue receipts and export goods from China, it must be able to legally registered as a local company or a WFOE. A WFOE is set up as limited liability entity and represents separate legal persons and is taxed according to local legislation.

WFOE’s can generally control their own governance through the articles of association and the normal minimum paid up share capital starts from 1 million RMB (approximately US$140,000), however some provinces offer lower capital requirements in order to attract more foreign investment. Many foreign investors find this type of company attractive because of the full control and 100 percent ownership.