Wednesday 28 March 2018

WFOE: Is It a Right Investment Vehicle For Your Business?

Have you been planning to expand your business to the next level? China is the fastest growing country that can give you the opportunity to explore tons of new business proposals and encourage you to expand your business to the international level. However, the process of setting up a business in China is not as easy as it may sound. You not only need to follow the complicated process of setting up a new business but also need to choose the right investment vehicle for your new venture.   




While choosing the type of ownership for your business, the important things that you need to remember are your company's structure and nature of the business. There are basically three types of investment vehicles are available including Representative Office, Joint Venture or Wholly Foreign Owned Enterprise. Choosing the right type of vehicle for your business can be tricky and should be based on a clear understanding of your organizational goals.

When it comes to extending a business to China, most investors choose the Wholly Foreign Owned Enterprise.The benefit of proceeding with a WFOE structure is that a foreign investor will not have the interference of a domestic partner when obtaining government approvals, premises, and land. In fact, WFOE structure enables foreign investors to have a complete freedom to implement the operational, investment and managerial strategies of the foreign parent company without having to take into consideration the interests, needs or goals of the local partner.

For new entrepreneurs, WFOE in Shanghai is the right investment vehicle as it provides you the complete freedom to set your business on your terms. With this type of investment vehicle, it is easier for a foreign investor to protect its structure and business deals.

Here are the few documents required for setting up WFOE:
  • Certificate of incorporations or equivalent document authenticated by the Chinese embassy. 
  • 3 bank reference letters from the investor's bank to declare a good standing.
  • Passport copy of WFOE legal representative
  • Statement of registered capital and business scope of WFOE for to prepare documentation.
  • Proof of office address in China including leasing contract and landlord identification. 

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