WFOE, wholly foreign owned enterprises, known as WOFE (wholly owned foreign enterprises). As the name implies, the company’s shares owned by foreign shareholders, and oversea owners can be individuals or foreign companies who have existed and registered in other countries.

As the most popular limited company type in the mainland China, WFOE is the most convenient way for nonresidents who plan to establish their business entities in Shanghai, China. The whole process of incorporating a WFOE is simpler and quicker since the implementation of business registration system.

If you are setting up a local WFOE to run your daily transactions and businesses, you have to decide what your WFOE does? What are the detail business activities for your Chinese enterprise? You have to register different licenses and permits for your business. Because these factors directly affect your opening costs and the annual maintenance costs of the business, normally, your WFOE can be a service industry, also can be a trade industry. Why SMEsChina say that first here, because service and trade industry, you have to apply for different permits, such as a trade WFOE, needs to apply for import and export license, and foreign trader certificate, and a trader maybe need to apply for the general taxpayer (VAT Qualification). All of these factors are affecting the whole costs and prices of each year.

1.1. Standard Prices of Government Offices

Whatever your WFOE is, service or trade industry, you may apply for the business license and the approval certificate of foreign investment enterprise for Free. Exactly, do not doubt, please, Chinese government does not need to pay any government costs for these licenses and permits, certificates.

About corporate stamp (seals) costs, need hundreds RMB costs, such as Shanghai, the seal cost is 240 RMB to 360 RMB (difference of 120 RMB, is contract stamp).

1.2. Service Costs of Company Formation Agents

Shanghai, China, as the most fashion and popular city, has many local professional lawyers, consultants and agents are providing the WFOE formation services with different prices and costs. Most of them providing registration services and license applications, also offering the later business operations and maintenance services for your WFOE, such as: virtual address, monthly tax returns, annual auditing, license renew and inspection services each year.

If you inquire a prices for your WFOE registration and annual company maintenance, each year you have to pay virtual registered address services, company registration fees and annual tax compliance to this agent around 2,000 USD to 8,000 USD each year to run a WFOE in China, just like SMEsChina provides these related services, our yearly package service fee is 4,950 USD (including following service items).

So, here comes the question, why the price is so much difference? Just like our chief manager of companies registration, Mr Mark, he was told from a potential customer, some company formation agents just need 1,000 CNY (100-130 USD) to complete the whole procedure of company formation, and bank account, and annual tax service package (12 months) only need 2,000 – 3,000 RMB (300-400USD). Amazing, so cheap costs to incorporate a WFOE in Shanghai China, SMEsChina hereby to explain the question, why the prices so much different in Shanghai China?

It was mentioned above, the government cost is free, just needs to apply for a set of company stamp with hundreds RMB, the rest of the prices quoted by these company registration agents are their service fees. Due to the agency’s operating costs and professional team members of the professional, skills, experience and other factors different, therefore, each agent provides different service fee to you, from the experience of company formation agency industry in Shanghai China, there has 3 types of traditional agents provide different service package to the market.

The first type of company formation agents, just have 2 to 3 people (maybe less) to provide services with a small work space, and through website market to get the orders from internet, at present, nearly 70% of the business registration agents in Shanghai are of this type. Due to the lower costs, these agents can provide a very low price to customers. Of course, most of them are very professional and reliable. And the prices they made are well below the market price.

The second type of the formation agents, have around 10 employees and the top leader has worked in the agent industry long time and has a certain customer base, the service chain involves company establishment, bookkeeping, trademark registration, personnel agency and other value-added services.

The third type of registration agents, have developed more than 10 years in Shanghai China, have own teams and lawyers and big amount of customer base, all legal files of company incorporation drafted by local lawyers without agents, and the team members have more than 10 person who have obtained the English speaking qualification examination. This type agents are licensed for providing services to nonresidents. So their service fees will be higher.

2. Hidden Costs of Setting a Limited Company

Main including 4 situations of the hidden cost as following, you have to learn, if you are deciding to register a WFOE in mainland China.

2.1. Translate Cost of Legal Files for a WFOE

Most of the key people of a Chinese wholly foreign owned enterprise from other countries (nonresidents), so you have to find a local agent company to provide translating services, such as: notarized documents, company registration forms, legal documents, etc. Small agents will outsourcing the translation to local translate agents, or translate these required documents by themselves, you should inquire your agents if the translating legal files need extra cost.

2.2. Bank Account Cost

General speaking, open a local bank account for your Chinese WFOE, needs to submit application forms and verify the passport information of the legal representative, then can be got approval to open a local account, in China, bank account opening is a most common hidden cost, you have to ask your local agents to confirm the banking package and annual operation costs for your bank account.

2.3. Virtual Registered Address Cost

First, you have to ask your agent, if the virtual registered address is legally, and if can be get business license and bank account whit this office address, most the company formation agents provide office address services, but they will offer a higher prices of the virtual address from the second year with different reasons, so SMEsChina lawyers suggest you signing a contract or agreement for the virtual address.

2.4. Tax Registration and Invoicing Machine Cost

General company agents will ask you pay the tax registration and invoicing machine fees, but some small agents will ask you to pay thousands RMB, and tell you that is paid to tax office, here, SMEsChina suggest you to ask this agent to give you the invoice issued by tax office, normally, the tax registration and invoice machine just need hundreds RMB (plus service cost).

3. Yearly Taxation Costs of Running a Chinese WFOE

Here, SMEsChina list a taxation table for your studies, if you want to learn more tax rules for your WFOE running and operation, you can link our guidance <What is the tax rules for a foreign company register in China> to get studies.

3.1. Small Scale Taxpayer Taxation Cost

Basic Taxes of Small Scale Taxpayer:Service Activities:Trade Activities:Engineering and Installation:
VAT – Value Added Tax3%

Tax-free application with a monthly turnover of less than 100,000 RMB


Tax-free application with a monthly turnover of less than 100,000 RMB


Tax-free application with a monthly turnover of less than 100,000 RMB

Corporate Income Tax – Profit Tax

( less than 1 million RMB each year )

5% ( preferential tax rate )5% ( preferential tax rate )5% ( preferential tax rate )
Corporate Income Tax – Profit Tax

( 1 – 3 million RMB each year )

10% ( preferential tax rate )10% ( preferential tax rate )10% ( preferential tax rate )
Corporate Income Tax – Profit Tax

( more than 3 million RMB each year )


3.2. General Taxpayer Taxation Cost

Basic Taxes:Service Activities:Trade Activities:Engineering and Installation:
VAT – Value Added Tax6%13%9%
Corporate Income Tax – Profit Tax

( less than 1 million RMB each year )

5% ( preferential tax rate )5% ( preferential tax rate )5% ( preferential tax rate )
Corporate Income Tax – Profit Tax

( 1 – 3 million RMB each year )

10% ( preferential tax rate )10% ( preferential tax rate )10% ( preferential tax rate )
Corporate Income Tax – Profit Tax

( more than 3 million RMB each year )


4. Annual Inspection and Government Auditing Fees

In China, each company needs to report annual inspection documents and auditing files to tax office to obtain the legal renew of business license. And each year’s annual inspection formula dates from January 1 to June 30, The corporate income tax settlement and audit procedures need to be completed between April 1 and 30 of each year. This period is the busiest time for accounting service providers, so the service fees will be increased. SMEsChina suggests you to confirm the prices in advance with no any hidden costs. Normally, government inspection and license renew no any government costs there, so just need to pay auditing costs to the providers, all package service just needs thousands RMB service and audit costs depending on the operations and taxation of the last financial year. The total package price of SMEsChina is 700 USD each year.

4.1. Annual Tax Settlement Cost

Normally, each year, tax office will ask local companies to provide the yearly settlement report of corporate income tax within April of each year. The market price around 100 – 120 USD each year.

4.2. Annual License Renew and Inspection

Normally around 200 USD, if a trade WFOE needs another cost (50 – 100 USD) for import and export license and permits.

4.3. Annual Auditing Fee

Depending on the total assets for the previous year, normally needs 350 USD each year, but sometimes, if your annual assets more than 5 million CNY, need to pay extra cost around 150 USD.

5. Difference and Comparison of the Prices Quoted by SMEsChina

Service Industry

$4,950first year
  • Government Costs
  • Certificate of Registration
  • Business License
  • Seals/Stamps
  • Virtual Business Registration Address ( 12 months )
  • Annual Tax Compliance ( 12 months )

Trade Industry

$6,450first year
  • Government Costs
  • Certificate of Registration
  • Business License
  • Seals/Stamps
  • Virtual Business Registration Address ( 12 months )
  • Annual Tax Compliance ( 12 months )

6. Other Useful Guidance on WFOE Incorporation

6.1. Links of Reference for WFOE Incorporation

Steps:Topics of Study:Links of Reference:
Step 1Decide what types of the company, depends on your key structure of corporation (shareholder’s structure).Selecting a company type
Step 2How to choose an available company name with bilingual for your private limited company.Naming rules and requirements
Step 3List detail business activities from 10 industrial categories.Selecting business scope
Step 4Set up the registered capital for your limited company.Company registered capital
Step 5Set up core people of your local corporation, and key positions.Decide corporate structure
Step 6Required documents you have to prepare in your country.Documents required to register a company
Step 7Prepare notarization and authentication documents issued by China embassy.Notarization and authentication documents
Step 8Download application forms and legal files and after filling and signing, courier to SMEsChina offices.Company formation documents download

6.2. 20 Working Days to Incorporate a Chinese WFOE

Description of Each Step:Time Required:
Chinese WFOE company name submit, search and obtain approval3 working days
Download and signature of the required documents of company formation (see below) and courier to SMEsChina5 working days
Obtain the certificate of foreign owned (investment) enterprise and the certificate of business registration (known as: business license)5 working days
Apply for the company stamps (known as corporate seals) and obtain approval2 working days
Open a local corporation bank account and internet banking5 working days

6.3. Documentation and Requirement List

Key Structure of the Company:Required Documents you have to prepare in your home country:Remarks:
Corporate ShareholderNotarization and authentication documents for the certificate of registration of foreign parent company issued by the Chinese embassy. Learn more: Qualifications and Legal Requirements of Shareholder2 sets, bilingual
Individual ShareholderDigital photo, notarization and authentication documents for the passport issued by the Chinese embassy. 16 years old at least.2 sets, bilingual
Legal Representative – Chinese PeopleOriginal ID card, 16 years old at least. Digital photo.none
Legal Representative – NonresidentDigital photo. Notarization and authentication documents for the passport issued by the Chinese embassy. 16 years old at least. Learn more: Legal Representative Requirements2 sets, bilingual
Supervisor – Chinese PeopleOriginal ID card, photo, 16 years old at least. Digital photo.none
Supervisor – NonresidentPassport copy, photo, 16 years old at least. Digital photo. Learn more: Legal Requirements of the Supervisornone
Financial ManagerLocal ID copy, photo, 16 years old at least. Digital photo.none
Incorporating a WFOE With No Hidden Costs

Setting up a local wholly foreign owned enterprise and to learn the running costs of maintaining a Chinese enterprise.

Service Type: WFOE Incorporation Services

Price: 4,950-6,450

Currency: USD

Ready to Start and Launch a Business in China? So Are We.

SMEsChina teams focus on the growth of enterprise and providing a variety of business solutions in the area of strategy consultancy, WFOE setting up services, business registration, company formation, incorporation of domestic invested enterprise, finance and audit services, HR and payroll, corporate bank account, resident permit, immigration and visa, trademarks and legal compliance.

China is attracting more and more foreign companies, SMEs,entrepreneurs, startups, brands to invest and establish their business entities through reforming various laws and regulations actively. More than 47 million companies and small medium enterprises have registered their business entities in mainland China and over 3.5 million new enterprises are incorporated during each financial year with comfortable process of registering companies. Here SMEsChina is sharing our knowledge and business insights to global enterprises and companies for better learning the regulations and rules of China corporations running and corporate maintaining. All reference and guidance collected by SMEsChina Teams in accordance with the latest implemented laws of the People’s Republic of China on Wholly Foreign-Owned Enterprises ( WFOE ), Joint Venture ( JV ) and Limited Liability Company ( LLC ), Limited Liability Partnership ( LLP ), and other relevant and officially promulgated regulations and rules on the corporation formation and registration of industrial and commercial enterprises and related IP laws, immigration and resident policies ( VISA ), tax laws.

SMEsChina teams happy to work around you and look after your daily China operations confidently and smoothly. Check if setting up a private company is right for you, if you have everything to set up a business in Mainland China, you can get in touch with our teams to get more useful information and online guidance.

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