Do you know many foreigners own their companies in China? It’s surprisingly a lot. Some of these foreign companies have been in China for decades.
And many of them are WFOEs (wholly foreign-owned enterprises).
Moreover, the good news is you can open your company in China, too.
Keep reading and get more tips from this article.
The term WFOE is the short name of wholly foreign-owned enterprise.
As you might tell from its name. It refers to foreign-invested enterprises in China. And the owners of the enterprises are 100% foreigners.
WFOEs in China also include the kind of enterprises. With owners from Hong Kong, Taiwan, Macau and any other places outside mainland China.
Among the many, there are 3 major types of WFOEs in China by business scopes.
Manufacturing WFOEs, trading WFOEs (aka FICEs) and consulting WFOEs.
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And a WFOE can be a mix of the above 2 or 3 types.
Typically global household names choose to be a mixture of them for a multitude of reasons and seeing China is a country with a population making up nearly 20% of the world It’s definitely the place they can’t miss to expand their business to.
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(image source: media.daimler.com)
The name of Daimler Group might sound new for you. But you must have heard the famous brand Mercedes-Benz.
And Mercedes-Benz belongs to the Daimler Group.
Daimler has developed its business as a WFOE in China for almost 20 years. Since the establishment of Daimler Greater China Ltd. in the year 2001.
Most recently, a report by Reuters revealed that Daimler’s business in China has picked up. After the epidemic situation of COVID-19 within the country.
“In China alone, we sold around 50,000 vehicles again in March. That makes us confident,”, said Markus Schaefer, a managing board member for production (source: reuters.com)
According to the report, Chinese customers have bought 694,200 Mercedes-Benz cars in 2019. With a share of 29% of the total sales.
Moreover, the Daimler Group is likely to invest more in China in the coming years.
Evidence from the strategy of marketing and management reported on Daimler’s official website.
The report says, the group extended Hubertus Troska’s contract until December 31, 2025. In the Board of Management responsible for Greater China.
According to Manfred Bischoff, Chairman of the Supervisory Board of Daimler AG.
Troska has greatly developed and promoted the business of the Group in China. And have created outstanding success especially for the Mercedes-Benz brand in the Chinese market.
Strategically, we want to significantly expand our group-wide footprint in China. China is the world’s largest growth region in the medium term. By far the most important market for Mercedes-Benz Cars and essential for our truck and van business. In addition, we want to further strengthen our local activities in research and development, production and purchasing. (source: daimler.com)
(image source: en.wikipedia.org)
GE’s history in China can date back to 1906. The time when it started doing business in China.
At that time, GE was one of the most active foreign companies in China.
Although GE’s business in China once stopped due to wars and political reason. The Group continued to trade with PRC in 1979. And in the same year, established its office in Beijing.
Today, you can find GE’s operations in China for all of its businesses.
It has 22,000 employees, 7 R&D centres, more than 60 laboratories, over 30 manufacturing bases. In more than 40 cities in the country. In 2015, GE’s revenue in China amounted to $8.1 billion. (source: ge.com)
The wind energy business for example.
According to GE Reports, the news centre of the group. GE has signed a contract to build a 715 MW in northern China’s Henan Province.
This record deal represents GE’s largest-ever wind order in Asia, as well as the single-largest onshore wind deal ever awarded to a non-Chinese wind turbine generator OEM in China. (source: genewsroom.com)
There are more wholly foreign owned enterprises in China. Like
Yum! Brands
The McDonald’s
Wal-Mart
Coca-Cola
Microsoft
HP
Dell
Also, those from other Asian countries, including
Toyota
Honda
Suzuki
Casio
Fujifilm
Samsung
LG
There are many other more WFOEs in China beyond the capacity of the list.
They are still making money in different cities all over China.
Since the free-market policy in 1978, foreign investment has flowed rapidly in the country. and with the latest policy changes, it is even easier and affordable to start your business today.
But why choose a WFOE but not the other forms of enterprises?
You’ll find the answer below.
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Business is pretty much about profits and benefits. And that’s the reason why these foreign companies expand their business based in China as WFOES.
There is a bunch of benefits to having a WFOE in China, including:
You probably want more control of your business, especially in a foreign country.
For that purpose, a WFOE can meet your need.
No local shareholders to involve with the shares and decisions.
And you can also own the whole company by yourself if you prefer less different opinions in management.
The more control you have with your business, the less possible to risk.
Given reveal of business secrets is common to see. Among the companies with multiple owners in particular. Not to mention the cases of multinational shareholders with different culture background.
Keep it more easily to reach within your capacity. Especially when you have a small team. Or when your business involves confidential technology.
In these cases, a WFOE can be better protection for you.
Another good thing about a WFOE is the rights of finance.
After all, money is an import factor in the business world.
It’s easier to give and receive money with its own account. A WFOE has those rights since it’s an independent legal entity.
Also, you can convert the RMB to other currencies more easily with a WFOE in China.
Besides, thanks to the friendly wages, rent and tax in China.
All these make it more affordable to run a WFOE.
You will probably have to pay double or even times of the price to get the same resources.
Find out more on A Comprehensive Guide about Wholly Foreign Owned Enterprise.
Now, we believe you know why many foreigners choose to set up their WFOEs in China.
And you’re probably wondering how to be part of the game.
If you’re looking to set up a WFOE in China. GEI would be your professional helper to ease your setup process.
Some might ask, why not do it by myself?
To help you understand more about that. Take a look at the WFOE setup process below.
Plus, the following things to complete the task. (reply in 30 days)
Make a report about your business and send it to the local government. (reply in 30 days)
Prepare the files in Chinese language and apply for setup. (reply in 90 days)
Register your WFOE and get the business license. (in 30 days from approval)
Register your WFOE in tax-related departments. (in 30 days from the issuance of the business license)
Thank about the time visiting the departments. And the situations to deal with the officers who might know little or no English.
Moreover, if you have the documents in the wrong formats or miss some information. The process could be even longer.
However, with the help our experienced team, you can pretty much save your time for your business itself.
We’ll figure out the whole thing from making the report to launch your WFOE.
Know more about the setup process of a WFOE in China.
If a WFOE does not cater to your needs. There are still some other options to start your business in China.
Such as a joint venture (JV) involving Chinese local partners.
Or a representative office (RO) that needs even less investment.
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