Open a WFOE in China – with the substance banks and the tax bureau expect.
Many Chinese companies opened by foreign founders never become functional: they cannot issue Chinese invoices, and the VAT refund they were opened for never arrives. We register the WFOE – a wholly foreign-owned enterprise – with a business scope that matches the activity it will run. The work covers filings, licence, seals, tax and currency-control registration. We stay on for the operations that follow.
When China is the right choice
Most founders trading with China should not open a WFOE
For most founders the right answer is a Hong Kong company buying from China as a foreign purchaser. If your suppliers insist on being paid in RMB inside China, a non-resident account at a mainland Chinese bank covers that without a WFOE – though it cannot issue fapiao, so it solves paying suppliers but not selling with Chinese VAT invoices. A WFOE wins in the situations below.
You need fapiao and the VAT cycle inside China
Chinese clients that pay you in RMB need fapiao – the official Chinese VAT invoice. A WFOE can issue them; a foreign company cannot. The export VAT rebate works the same way: only a Chinese company that exports in its own name can reclaim Chinese input VAT.
You’re hiring multiple people in China
Only a Chinese entity can hire Chinese staff under Chinese labour law, with formal contracts and social insurance. Without a WFOE you are limited to contractors and agency arrangements that work for one or two people.
Your trade volume justifies the substance cost
A working WFOE pays every year for an office, staff with social insurance, a treasurer, accounting and taxes, and it has to fund the VAT cycle. The break-even is around $2 million a year in trade. Below that, these costs are larger than the gain.
What’s included
The registrations and seals a WFOE needs to start operating
A Chinese WFOE is the legal entity plus a set of registrations and seals that have to be in place before the company can sign a contract or receive a payment. The package covers all of them. The whole setup takes 20–40 business days, including document legalisation and the bank account. The registry filing itself takes about 15 of those days in the standard cities.
Registration filings with AMR
These filings go to the Administration for Market Regulation (AMR), the registry that brings the company into legal existence.
- Company name pre-approval (Chinese name with city + trade type + 有限公司 suffix)
- Business scope formulation in the wording the local AMR will accept
- Filing of incorporation application with the local Administration for Market Regulation
- Coordination of shareholder document legalisation if the shareholder is a foreign company
- Available in Shenzhen, Guangzhou, Shanghai, Beijing as standard – other cities on request
Business Licence and five official seals
The company needs the licence and seals to sign contracts and to make bank payments. Whoever physically holds the seals controls the day-to-day operations of the company.
- Business Licence (营业执照) with unified social credit code
- Company seal (公章), financial seal (财务章), contract seal (合同章), legal representative seal (法人章), invoice seal (发票章)
- Seals carved at the official 刻章 office inside or adjacent to the AMR building
- Storage and handover guidance
Year-1 registered address and office lease
A registered commercial address is mandatory – the company cannot be incorporated without one. The package covers the first year.
- Virtual office in a city where it is accepted (consulting WFOE in most cities)
- Lease certificate (红本 / hongben) issued in the name of the WFOE
- Reception of government correspondence and tax bureau notices
- Switch to your own real office when you take a lease later – the VAT refund application requires one
Tax and SAFE registration, plus fapiao setup guidance
After the licence, these registrations let the WFOE receive capital and issue invoices.
- Registration with the local tax bureau and choice of general taxpayer or small-scale taxpayer status
- Guidance for your treasurer (出纳 – the staff member who handles the company’s cash and payments) on the fapiao (发票) device setup so the company can issue Chinese VAT invoices – the setup itself is done by the treasurer, not by us
- SAFE registration (外汇登记) plus the foreign-currency capital account it makes possible – where your registered capital arrives from abroad, and the channel for repatriating profits
The people your WFOE names and the capital it commits
The legal representative – usually you – signs contracts and deals with the government. The liability is personal: if the company owes tax, or has a court judgment or a regulatory violation against it, its legal representative can be restricted from leaving China. The finance officer – often the accounting partner – handles tax filings and banking. A supervisor has been optional for a small company since 2024, if all shareholders agree. Registered capital has no legal minimum, but banks and partners judge the company by the figure. The amount you commit must be paid in within five years. If it is not, the company can be placed on the abnormal-operations list. Once on that list, it can have its bank account frozen and lose access to government contracts.
Step-by-step: how to open a company in China
Roman goes through the eleven steps of opening a company in China. He covers what substance the company needs, the legal representative’s mandatory trip, how fapiao approval works, and why many WFOEs end up non-functional.
Watch on YouTube →Substance
What substance costs
The real cost of a Chinese company is not the few thousand dollars to open it. It is the thirty to one hundred thousand dollars it takes to build and maintain the substance: an office a tax inspector can visit and Chinese staff on payroll with social insurance. It also pays for six to twelve months of clean bookkeeping before the first refund arrives.
The VAT refund is the most common reason founders open in China, but the tax bureau checks that substance before it pays. By then, fifty to one hundred thousand dollars is already spent. The refund adds two to four per cent of margin. A Chinese export agent charges the same two to four per cent to handle the export, and with an agent you set up nothing.
Start with these videos. The rest of the China playlist on our channel covers how a Chinese company runs after registration.
Do you really need a Chinese company?
The six most common reasons founders give for opening in China. Roman shows where each one fails.
Why we talk clients out of opening in China
When Hong Kong is the better base, and the rare case China wins.
How China export VAT refund works
The four conditions the tax bureau checks before paying out.
The full China series
Every video in the series, including how to open a company in China and how to run it.
How we work
From the first call through ongoing operations
The first step asks whether you need a Chinese company at all, and most providers skip it. The last one continues for as long as you need us.
We map your business and check whether China fits
The call with Roman and the USG team takes 30 minutes. Together we go through your business model, supplier base, expected volume, and whether a China setup is the best option for you.
We prepare documents and the business scope
You answer the questions and provide the documents. We draft the business scope wording and submit the company name for pre-approval. If the shareholder is a foreign company, we help you coordinate the legalisation of the corporate documents in your home country.
AMR filing and legal rep travel
We file the incorporation with AMR. Most cities require the legal representative to be physically present for face verification, and for the bank account opening that follows. We schedule the trip so the on-the-ground steps are grouped into a single visit.
Tax, SAFE, customs, bank accounts
We arrange the seal carving and complete the tax registration and the SAFE filing for capital and repatriation. A trading company also needs import-export registration with customs, which we handle as an additional service. Then we open corporate accounts at branches chosen for your profile.
Operations support and accounting
We advise you on running the company and take care of monthly accounting and tax filings. When your business needs them, we also help with import-export procedures, supplier sourcing, contracts and the export VAT refund.
Book a free call
The wrong company in China is expensive to close down. A free 30-minute conversation with Roman and the team is the check to make before any registration fee is paid.
Book a free 30-minute call