Company registration
in China

China is not an offshore or low-tax jurisdiction for foreign business. It is a market for real operational presence. Businesses register a company in China when they need to work with suppliers, launch manufacturing, handle import and export, sell to local clients, hire employees or manage banking operations in Mainland China.

WFOE – Wholly Foreign-Owned Enterprise, 外商独资企业 – is a limited liability company registered in Mainland China and wholly owned by foreign investors. It allows a foreign investor to conduct commercial activities in China without a Chinese partner, provided the chosen activity is not restricted. Unlike a Representative Office, a WFOE is a registered legal entity and can be used for trading, services, manufacturing, e-commerce and import-export operations.

Before registration, it is important to determine the business scope, city, registered address, share capital, banking profile and any additional licenses required. Errors at this stage can affect registration, banking, taxes and the company’s ability to operate.

Main types of WFOE

Service WFOE – services, IT, consulting, B2B operations.
Trading WFOE – trading, sourcing, import and export.
Manufacturing WFOE – production, assembly, factories, quality control.

Why business scope matters

Business scope is the officially approved list of activities a WFOE is permitted to carry out in China. It is recorded in the Business License and determines which contracts the company can sign, which invoices it can issue, which counterparties it can work with, which licenses may be required and which tax and reporting requirements may apply.
An incorrectly defined business scope is one of the most common causes of registration delays, banking delays, additional compliance questions and difficulties obtaining additional licenses. Changing the business scope after registration is possible, but it requires time, additional costs and re-approval.

The Negative List and restricted sectors

Not all activities are available to foreign investors without conditions. China maintains a Negative List: a list of sectors where foreign investment is restricted or prohibited. If an activity is not included in the Negative List, foreign and domestic investors are generally treated equally.
In certain cases, an activity may require a Chinese partner, a special permit or may be unavailable to a WFOE. Before registration, it is essential to verify whether the planned activity is restricted and whether it can be registered in the chosen city.
Some free trade zones and special economic zones may offer additional liberalization measures, pilot rules or incentives. Their applicability depends on the specific activity, location and current regulations, and should be reviewed on a case-by-case basis.

When additional licenses are required

For a number of activities, a Business License alone is not sufficient. Additional permits may be required for:

• import and export of goods;
• food and beverage operations;
• medical devices and equipment;
• educational services;
• telecommunications and internet services;
• financial services;
• manufacturing of certain product categories.

Having the required license in place may directly affect the company’s ability to open a bank account, issue invoices, sign contracts and begin operations in China.

Registered capital is the declared share capital of a WFOE. China operates a subscribed capital system: funds do not need to be deposited at the time of registration, but the declared amount must be realistic and consistent with the company’s business model.

A practical starting point for a standard WFOE is 100,000 RMB. For projects involving import, export, VAT refund, warehouse operations, employees and active trading, the capital is typically set higher. 500,000 RMB is often used as a practical reference point for such structures.

Under the revised Company Law PRC, in force since 2024, all subscribed registered capital must be fully paid up within 5 years of the company’s incorporation date. This requirement is set out in Article 47.

When registering a WFOE, the following key corporate roles must also be defined: shareholder / investor, legal representative, director / executive director, supervisor, person in charge of finance and, where applicable, general manager. The correct structure matters for registration, banking, tax compliance and ongoing management of the company.

A corporate bank account in China is required for supplier payments, rent, taxes, payroll and day-to-day operating expenses. The bank reviews the UBO, ownership structure, business model, registered address, counterparties, source of funds and expected transaction volumes. In most cases, the client’s in-person presence is required to open the account.

Key taxes for a WFOE:

Corporate Income Tax (CIT) - standard rate 25%; a reduced rate of 15% may apply to companies with High and New Technology Enterprise status.
VAT - typically 13% for goods, 9% for selected categories and 6% for many services; the applicable rate depends on the nature of the transaction.
Withholding tax on dividends - standard rate 10%, unless a reduced rate applies under a tax treaty.
Payroll, IIT and social insurance apply when the company has employees.

Foreign exchange in China is regulated by SAFE - State Administration of Foreign Exchange. Profit repatriation is possible after taxes are paid, financial statements are prepared, corporate resolutions are passed and the required banking and foreign exchange procedures are completed.

A WFOE is the right choice if:

• you work with Chinese suppliers and want to sign direct contracts;
• you are planning manufacturing, assembly or quality control in China;
• you need a corporate bank account in China for CNY payments and local operating expenses;
• you want to employ staff legally in China;
• you are launching a trading, service or manufacturing company;
• you are entering the Chinese market through B2B, e-commerce or local sales;
• you want to reduce dependence on agents and intermediaries.

A WFOE may not be the right fit if:

• you need a simple holding structure with no operational activity in China;
• you have no operational connection to the Chinese market: no suppliers, clients or local operations;
• you are looking for a low-tax or offshore regime;
• your company is not ready for regular accounting, tax reporting and compliance obligations;
• your chosen activity is restricted for foreign investors or requires additional permits;
• you do not have the budget to maintain an operational company in China.

If you are not sure whether a WFOE is right for your project, we will review your business model, check your business scope and explain which structure works best for your situation.