What is a wholly foreign-owned enterprise in China?

It is a company established in China according to Chinese laws and is wholly owned by one or more foreign investors. WFOE is of limited liability, i.e.: shareholders will only be liable for the amount of shares that they have subscribed to. The laws that set down the rules for WFOE are:

• Law on Foreign-invested Enterprises (WFOE law)
• Implementing Rules of the WFOE Law
• Company Law