Doing business with China remotely is a common way to start collaborating with the Middle Kingdom. Many companies have begun this way, either by importing products (sourcing) or selling to China. Of course, it’s easier to start by relocating to China for a while, but not everyone can afford to do so. A practical solution is to work with a local agent or representative who understands the realities of the Chinese market. Once initial business goals are achieved, and it makes economic sense, you can establish your own company in China.

What are the benefits having WOFE in China?

A foreigner can establish a company in China – WOFE (Wholly Owned Foreign Enterprise), even without permanently residing behind the Great Wall. Today, registering WOFE in China is simpler than it was a few years ago. Although the authorities in Beijing don’t explicitly communicate this, it’s likely that these simplifications stem from China’s economic situation and the exhaustion of the straightforward growth model that has driven its economy for decades.

Even small investors can benefit from registering WOFE. For importers, it allows direct purchases from manufacturers and the consolidation of shipments according to their specific needs. Additionally, they can apply for VAT refunds after clearing goods at a Chinese port. This advantage enables lower purchasing costs, which translates into higher profit margins when selling Chinese products.

For exporters selling to China, sooner or later, the question arises of whether to establish a warehouse for their products in China. To do this, they must register a company (WOFE) and become the importer of their own goods. The main benefit is the ability to sell directly to customers or distributors, bypassing local importers. By owning WOFE in China, exporters can have better control over their supply chain, optimize costs, and maintain direct access to market intelligence, giving them a competitive edge.

Chinese importers often shield producers from accessing their distributors, making it harder to gather direct market information and forcing producers to rely on incomplete reports from the importers. However, in many industries, building direct relationships with the market, distributors, and gaining insights into technology and trends is a crucial element of establishing a strategic advantage.

WOFE registration in China step by step?

The process of WOFE registration is preceded by the preparation of the required registration documents. This is the most tedious stage, as it requires the investor to make several important decisions regarding the ownership structure, registered capital, and representation in China. Additionally, a name for the Chinese WOFE must be chosen, and its availability checked in local business registers. Based on our experience, preparing the registration documents can take up to two months.

The longest procedure involves properly certifying the investor’s documents in accordance with their nationality and the relevant provisions of Chinese law. For foreign investor, their documents must be authenticated through the apostille process or go through legalisation procedure, depending investor’s origin. The registration of a Wholly Foreign-Owned Enterprise (WOFE), starting from the submission of the original documents, typically takes up to 10 business days for a standard consulting or trading one.

What do you receive after registering a Chinese WOFE?

The confirmation of your Chinese WOFE registration includes a registration certificate and company seals. You will receive four seals. The first is a round company seal with a distinctive red five-pointed star in the center (company stamp). Two of the seals are square: one is the financial seal, and the other is the seal of legal person responsible for the company (legal person seal). The last seal is used for stamping invoices, but in the era of electronic invoicing, it is becoming less frequently used. This seal is usually retained by the accountant.

After obtaining the registration certificate, it is necessary to open a bank account, which usually requires the authorized representative of the WOFE to travel to China. The final step, which does not require the investor’s presence in China, is registering the company with the tax office.

When planning your project, the realistic time required to register a WOFE in China is 2–3 months. This includes the time needed to prepare the registration documents, obtain apostille certification, and for the investor to travel for the scheduled bank appointment.

What is an Apostille?

An apostille is an official certification procedure that validates documents issued in one country for use in another. If the investor’s country is a party to the Hague Apostille Convention, this certification is required for registering a WOFE in China.

Be sure to familiarize yourself with the details of obtaining an apostille, as the process may vary depending on the type of document you need to certify. Most often comprehensive information is available on official website of your government.