Starting a WOFE in China – Step by Step
So, how many billionaires are there in the world? As of 2014, there were exactly 1645 billionaires in the world. The most astonishing fact is that 66% of these billionaires are self-made. It’s also important to know that there are approximately 7.1 billion people in the world.
There are about 300 million people in the USA while in China, there are over 1.3 billion. There it is! You have it! China is where you should invest. If you want to know how to become a billionaire in 10 years, keep reading this article.
If you’re a westerner living in China, you should consider starting a WOFE/WFOE (wholly owned foreign enterprise China). Can you imagine doing business in a country where at least 500000 people are potential customers?
Owning your WOFE China business company as a foreigner will surely boost your income. However, there are some requirements you have to meet before starting your own business in China. Some of these requirements include; WOFE capital requirements and WOFE laws set by the Chinese government.
Step by step guide to starting a WOFE China business
Step 1 – This is where you file the official name of your Chinese business. Keep in mind that not all business names will be accepted hence you need to follow some of the guidelines available on Laowai Career’s social media pages and blog. You are also required to provide a lease contract of the rented building or space.
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Step 2 – Draft all the necessary documents in Chinese for the company registration at the proper premises. For instance, the Articles of Association should be included in this step. Other documents include; the bank reference letter, rental contract and the Feasibility Study Report (FSR).
Step 3 – Application for the business license at the local authorities should be the next step. These authorities include AIC (Administration for Industry and Commerce) and MOFCOM (Ministry of Commerce).
Step 4 – Now that you have a business license, it’s important to register for taxes at the local and State Tax Bureau. Here, you will be required to provide multiple documents such as the business license, contract lease, and more. In China, all official documents are only valid when they are chopped. To prevent one person from having all the control, you should disperse the chops.
Step 5 – Now, you should register your company at other relevant authorities. The WOFE law states that your company should be registered with 12 different authorities for it to get established. Some of these authorities include; the Statistical Bureau, the State Administration and Foreign Exchange, and the Technology Supervision Bureau.
Step 6 – This is the last step. Here, you should open an RMB bank account and a foreign currency bank account. This ensures that your company will not experience any obstacles when foreign capital is involved.
How to become a billionaire in 10 years in China
Did you know that China has more billionaires than the United States? Today, China has 596 billionaires while the US has 537 billionaires. Therefore, if you want to become a billionaire in the next 10 years as a foreigner in China, you should consider investing in:
- Manufacturing – This is the old-fashioned way of making money. However, you must have an immense capital to start this kind of wholly owned foreign enterprise China Company. The upside is that your returns will be tenfold.
- Healthcare – This is for foreign entrepreneurs who are into cerebral and intellectual things. Start a WOFE that’s focused on creating drugs for various diseases. For example, how much money can you make if you come up with a drug that can cure HIV or cancer?
- Energy – This is another goldmine that you should consider investing in. The world needs energy. It’s not easy to become a billionaire via this option, but China’s population will make things a bit easier for you.
- Food and beverage – People will always need to eat and drink. Take a look at MacDonald’s. People have made it a worldwide phenomenon.
WOFE China asset management and WOFE capital requirements
To ensure that your WOFE is running smoothly, you should familiarize yourself with WOFE China asset management tips. For instance, some foreign business managers prefer starting a WFOE branch. Why? Setting up branch offices is the easiest way to expand your WOFE. In fact, starting WFOE branches is less expensive and much simpler than starting a new WFOE. Some of the advantages of starting WOFE branches include:
- They offer the most cost-effective way of expanding a business in China.
- Branches have their own seals and business licenses hence; they can sign their own business contacts on behalf of the parent company. This attracts more income and employees.
- Branches can easily reach local companies that are far from their parent company.
- Branch offices have the ability to provide invoices to their clients and have a tax ID.
The only limitations of starting WOFE branches are; the parent company is liable for the actions of the branch office and business scope of the branch is limited and must be same as the one from the parent company.
The WOFE China capital requirement is 30000 RMB ($4000 USD) or 100000 RMB ($12000 USD) depending on whether the business is a multiple or single shareholder company. Keep in mind that these are the minimum WOFE capital requirements and they have no real meaning when forming a WOFE in China.
Common mistakes that Westerners make when setting up a WOFE in China
Investing in the wrong type of WOFE
To be on the safe side, you should define the scope of your WOFE China investment as early as in the application stages. There are three main types of WOFE:
· Manufacturing WOFE
· Consulting (service) WOFE.
· Trading WOFE or FICE (foreign invested commercial enterprise)
The cost, set up procedure and the working field will be entirely different.
Forgetting the relevance of chops
In China, the chops are the signature. Most western countries don’t use chops; hence, a foreigner might easily miss them. Also, you should choose carefully who gets the power to possess them. The most important chops are; the contact chop, the company chop, and the legal representative chop.
Choosing a wrong representative
A WOFE has different positions which need to be filled. The main positions are; legal representative, general manager, executive director, and supervisor.