The Wholly Foreign Owned Enterprise (WFOE or WOFE) is a Limited liability company wholly owned by the foreign investor(s). Any enterprise in China which is 100% owned by a foreign company or companies can be called as WFOE.
The registered capital of a Wholly Foreign Owned Enterprise (WFOE) should be subscribed and contributed solely by foreign investor(s). A WFOE does not include branches established in China by foreign enterprises and other foreign economic organizations.
Following are different types of WFOE. Commonly,
• If the WFOE only be allowed to manufacture here. we can say it's manufacture WFOE.
• If the WFOE is allowed to do Consulting & Service, we call them Consulting WFOE.
• 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)
According to WFOE regulations, "Foreign investors are permitted to setting up a 100% foreign owned enterprise in industries that are conducive to the development of China’s economic benefits, and not prohibited or restricted by China government." In China, Business scope of a business is a "one sentence description" covering all of the present and future activities of the WFOE; it is essential this encompasses every envisaged scope of future activity. The WFOE can only conduct business within its approved business scope, which ultimately appears on the business license.
Registered Capital for WOFE: Initial Paid-up would be 15% of the registered capital, the balance should be remitted within 2 years.
Since Jan. 1, 2008, China's new corporate income tax rates begins with 25%. All enterprises are required to report to the Tax Administration Department monthly, quarterly, annually.
Any WOFE in China should summit annual audit reports to the relevant authorities. The audit reports are including: balance sheets and income statements for their annual Chinese audit. June 30th is the deadline of an annual audit report submission and licenses renewal in China.
For more information about WFOE setting up in China, please send enquiry to info@icm168.com

Joint ventures with Chinese companies offer one of the most effective ways for western companies to tap the massive China market. In a sino-foreign joint venture, the Chinese company usually brings the labour, land use rights and factory buildings, while the foreign company delivers the necessary technology and key equipment, as well as the capital. The Chinese authorities encourage foreign investors to use this form of company in order to obtain exposure to advanced technology and new management skills. In return, foreign investors can enjoy low labour costs, low production costs and a potentially large Chinese market share. Joint Ventures are sometimes the only way to register in China if a certain business activity is still controlled by the government, for example, Telecommunications, car production etc.
As the investment regulation and business environment changes in China, less and less foreign investor use joint venture as the investment vehicle. RO and WFOE are now most commonly used. JV is fading out because of the practical difficulties in : * picking the proper China partner * management * technology transfer * profit sharing, etc.

Representative Office (Rep. Office)

The simplest and most cost effective method of establishing a useful business presence in China is the Rep Office. The choice for an initial Rep office will normally be determined by basic market and product research in China. The high profile cities of Shanghai, Beijing, Guangzhou, and Shenzhen are the most likely choices for the Rep office. It should be noted that more than one Rep office can be established in China by a foreign entity.

A Rep. Office is an entity involved in business activities, which do not result in direct profits being made by the office. They are not allowed to operate as partnerships or sole proprietorships in China as they are not recognised as legal persons. However, they are allowed and encouraged to conduct ‘indirect operational activities’ such as liaison for business purposes, introduction of products, market research and technology exchange. These activities should be preparatory and supplementary activities, market research on the local market, providing business information and supplying sales for the headquarters. The foreign enterprise applying for the Rep. Office must be legally registered in its country of origin for at least 12 months.