Q&A
How many types of wholly foreign-owned enterprises (WFOEs) are allowed by law in China?
How many types of wholly foreign-owned enterprises (WFOEs) are allowed by law in China?
There are three types that are currently allowed:
- Service (or consulting) WFOE;
- Trading WFOE (or Foreign-Invested Commercial Enterprise – FICE); and
- Manufacturing WFOE
Despite having the same legal identity, they have significantly different set up time and procedures, costs and range of commercial activities that they can engage in. Also, the scope of business of the WFOE must be specified in the application. The scope cannot be longer than one sentence, but it must describe all possible activities that the enterprise may engage. Eventually, the scope will be listed on the business license.
If the scope of business should be altered, it requires further application and approval, which can be very time-consuming.
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