What are the advantages of registering a wholly foreign-owned enterprise in China?
Wholly foreign-owned enterprise registration is the most complete and flexible option for setting up a company in China. It has many advantages over a representative office or a joint venture. Here are some of the key advantages we see during the WFOE formation process.
Independence and freedom:
Wholly foreign-owned enterprises are independent and able to manage their own operations, funding and business development. This independence and freedom gives companies greater control over their own development direction and business decisions. Wholly foreign-owned enterprises can manage their own human resources (without using an agency) and hire local and overseas staff.
Enjoy preferential policies:
Wholly foreign-owned enterprises can enjoy the preferential policies granted by the Chinese government to foreign-invested enterprises, including tax reductions and exemptions, land lease concessions, etc. These preferential policies can reduce the operating costs of enterprises and improve their competitiveness.
Ability to send money overseas：
Any operating profits earned in China can be converted into foreign currency and transferred to the overseas parent company. Wholly foreign-owned enterprises can convert RMB profits into U.S. dollars and remit them to their overseas parent companies. This transformation can reduce exchange rate risks and improve the financial stability of enterprises.
Enterprises provide more opportunities for cooperation and exchange.
Chinese legal requirements for corporate offices of wholly foreign-owned enterprises
Wholly foreign-owned enterprise entities must have a registered address within mainland China. The address must be a real physical address with a house number that can be verified upon a personal visit by a Chinese government official. Moreover, it is stipulated that a company can be established at one address, but in fact, it is allowed that the company's business place and registered address are not at the same place. A company can have multiple business addresses: its main office is used as the registered address.
It is important to understand that under Chinese law, an individual or corporate entity cannot simply rent a virtual office and establish a company as is the case in many countries. The rationale for this rule is that if a WFOE is sued in a Chinese court or certain official documents need to be delivered to the WFOE, the Chinese authorities can find an agent to serve the proceedings.
Registered Address: The Dangers of Applying for Corporate Registration of a Virtual Office
First of all, it is illegal for a wholly foreign-owned enterprise to register with a false address or non-real business location. According to my country's "Company Registration Management Regulations", if you submit false materials or use other fraudulent means to conceal important facts to register a company, the company registration authority will order you to make corrections and impose a fine of not less than 50,000 yuan but not more than 500,000 yuan; if the circumstances are serious, the company will be revoked Registration or business license.
Secondly, there is the trouble of handling tax registration. After an enterprise obtains a business license, it must apply for tax registration and obtain a tax registration card. The tax registration authority is not allowed to accept quotations from the national office phone number, and is even required to verify and take photos of the registered address in person. If it is a virtual office, the tax authorities will not issue the relevant tax registration certificate.
Shared office: giving wholly foreign-owned enterprises more freedom and efficiency
With the development of modern society, the needs of enterprises for office space are also constantly changing. Shared offices can be used as a new office model, providing enterprises with a more flexible, efficient and cost-effective office solution.
In shared offices, companies can cooperate and communicate with other companies to innovate and develop together. This kind of cooperation and communication can help enterprises better understand market needs and trends, and can also provide enterprises with more business opportunities. Shared offices offer flexible lease and rental plans, allowing companies to adjust their office space at any time according to their needs. At the same time, shared offices also provide basic office facilities, including desks, chairs, conference rooms, printing equipment, Internet connections, etc., so that companies do not need to invest a lot of money in decoration and equipment purchases.
In addition, shared offices also provide enterprises with more resources and support, such as administrative support, IT support, business services, etc. These services can help enterprises better manage office space and improve work efficiency, while also providing enterprises with more opportunities for cooperation and communication.