As the world’s second-largest economy, China continues to offer immense development potential and expanding market opportunities for international investors. With its rapid economic growth, open-door policies, and continuous improvements in the business environment, China—particularly the Greater Bay Area (GBA)—has become a strategic destination for foreign enterprises seeking long-term growth.
Since joining the World Trade Organization, China has progressively liberalised its markets, opening a wide range of sectors to foreign participation. The Greater Bay Area, encompassing key cities such as Shenzhen, Guangzhou, Zhuhai, and Hong Kong, offers an integrated economic zone with unparalleled connectivity, infrastructure, and innovation potential.
At CityLinkers, our experienced team provides a comprehensive, one-stop service to help you seamlessly establish a business entity in China. From pre-establishment advisory to company registration, compliance, tax structuring, and ongoing support, we guide you through every stage of market entry—ensuring that your expansion into China is efficient, compliant, and strategically positioned for success.
Wholly Foreign-Owned Enterprises (WFOEs)
A Wholly Foreign-Owned Enterprise (WFOE) is a limited liability company incorporated in Mainland China that is entirely owned by one or more foreign investors. As an independent legal entity, a WFOE enjoys full control over its operations without the need for a local partner, allowing foreign investors to operate in China with greater autonomy and flexibility.
WFOEs are authorised to conduct business within the scope approved by the authorities at the time of registration, and they are increasingly popular among international companies entering the Chinese market—particularly in the services and technology sectors. Common applications include consulting, management services, software development, import/export, and trading activities.
With its ability to directly hire staff, issue invoices in RMB, and repatriate profits, the WFOE structure offers a strategic and efficient option for foreign enterprises seeking to establish a long-term presence in China.
Advantages of Wholly Foreign-Owned Enterprises (WFOEs)
Ability to Issue VAT Invoices
WFOEs are authorised to issue official value-added tax (VAT) invoices (known as “fapiao”) in China. This allows them to conduct legitimate business transactions with Chinese customers and suppliers, who often require VAT invoices for their own tax deductions and compliance. Issuing VAT invoices enhances the WFOE’s credibility in the local market and facilitates smoother commercial operations.
Repatriation of Profits in Foreign Currency
WFOEs have the capability to convert Renminbi (RMB) profits into foreign currencies such as US dollars and legally remit them overseas as dividends to their foreign shareholders. This facilitates efficient cross-border profit distribution, provided that the WFOE complies with local tax clearance and foreign exchange regulations.
Import and Export Autonomy
WFOEs enjoy the legal right to independently engage in import and export activities. This includes the freedom to trade goods, issue and receive customs declarations, and manage international logistics without reliance on a local partner—enhancing operational flexibility and supply chain efficiency.
Full Control Over Business Operations
A WFOE provides foreign investors with complete control over internal resources, including staffing, finance, operations, and strategic decision-making—ensuring alignment with global standards and the parent company’s objectives without local interference.
Capital Requirement for WFOEs
While there is currently no officially mandated minimum capital requirement for establishing a Wholly Foreign-Owned Enterprise (WFOE) in China, it is strongly advisable to register an amount sufficient to cover initial operational costs and investments before the business begins generating revenue. This includes expenditures such as rent, staff salaries, equipment, and working capital.
Undercapitalising your WFOE may lead to liquidity issues or the need to inject additional funds later, which can trigger extra administrative procedures—such as reapplying for approval from authorities, paying additional licensing fees, and renewing business licenses or related permits. To avoid such disruptions and maintain smooth operations, a carefully planned capital injection at the outset is recommended.
Equity Joint Ventures (EJVs)
An Equity Joint Venture (EJV) is a legal entity with limited liability, jointly established by a foreign investor and a Chinese partner. The Chinese partner must be a registered company (not an individual), whereas the foreign investor may be either an individual or a company.
Each party’s liability is limited to its capital contribution, and profits, losses, and control rights are typically distributed in proportion to each party’s equity stake in the venture. EJVs are often used in sectors where local market knowledge, distribution channels, or access to government relationships are essential for success. They offer a collaborative framework that combines foreign capital and expertise with domestic resources and networks.
China Company Registration Requirements
To successfully establish a company in Mainland China, the following key requirements must be fulfilled:
Registered Address
A physical business address in China is mandatory. Virtual offices are generally not accepted for registration purposes.
Shareholders
A minimum of one shareholder is required. There are no nationality restrictions—both individuals and companies (foreign or domestic) may act as shareholders.
Director and Legal Representative
At least one director must be appointed. If there is only one director, that individual must also serve as the legal representative of the company. The legal representative holds significant authority and is accountable for the company’s actions.
Supervisor
A minimum of one supervisor is required. This person must not simultaneously serve as the company’s director or legal representative. The supervisor's role is to oversee the company’s operations and protect shareholder interests.
Hong Kong Company as Shareholder
If a Hong Kong company is to act as a shareholder, its incorporation documents must be notarised and legalised for use in China through a recognised Chinese authority (usually via the China Legal Services (H.K.) Ltd or the Chinese embassy/consulate).
CityLinkers Company Formation Services Include
Provision of Registered Office and Agent
We provide a compliant and strategically located registered address in Mainland China, required for all corporate registrations. This includes serving as the registered agent to handle official government correspondence, legal notices, and administrative documents on behalf of your company. Our service ensures you meet the statutory requirements and maintain a professional business presence in the region.
Business Registration
We manage the entire business registration process from start to finish, including company name pre-approval, drafting and filing incorporation documents, obtaining a business license, and coordinating with relevant local authorities. Our team ensures that your company is set up correctly under Chinese regulatory frameworks, minimising delays and ensuring a smooth market entry.
Review of Due Diligence Documents
Our experienced team will guide you through the collection and verification of necessary due diligence documents. We conduct thorough reviews of shareholder identification, proof of address, corporate documents (if applicable), and other required materials to ensure full compliance with the regulations of the State Administration for Market Regulation (SAMR) and local bureaus.
Preparation of Company Secretary Documentation
We support your company in preparing all required governance and compliance documentation typically handled by a company secretary. This includes shareholder and board resolutions, director and officer appointments, Articles of Association drafting, and maintenance of statutory registers. These documents are essential for the legal operation and recordkeeping of your entity in China.
Annual Filing and Renewal
We provide ongoing support to help you meet annual regulatory obligations, including annual inspections, tax filings, license renewals, and the submission of updated business information to authorities. Staying compliant with these requirements is critical to avoid penalties, maintain operational continuity, and preserve good corporate standing in China.
Assistance with Chinese Notarisation
For foreign shareholders, particularly Hong Kong companies acting as investors in PRC entities, notarisation and legalisation of corporate documents is a mandatory step. We assist in coordinating with authorised notary offices and Chinese embassies or consulates to ensure all documentation is correctly notarised and accepted by Chinese authorities—streamlining the investment process and reducing administrative risk.
Contact Us
Should you require further information regarding our company incorporation and business setup services in the People’s Republic of China, including the Greater Bay Area, please do not hesitate to contact us.
Our team of experienced professionals is readily available to provide detailed consultation and tailored solutions to support your business expansion in China. We would be pleased to arrange a meeting at your convenience to better understand your objectives and how we may be of assistance.
We look forward to the opportunity to support your business endeavours and to be your trusted partner in achieving long-term success in China.
