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The People’s Republic of China (PRC), the world’s second largest economy, is also one of the world’s most attractive emerging markets. Over the years, the Chinese government attraced large foreign companies to increase GDP.  In 2001, Chinese admission to the World Trade Organization (WTO), and the effort to attract even small and medium enterprises, increased economic development.  It’s now easier to incorporate a company or start a new business venture in the PRC. WTO membership has eased registration of WFOE (Wholly Foreigner Owned Enterprise), though forming a company in China still requires a fair amount of bureaucratic steps.


Main features & Advantages

  • World’s 2nd largest economy
  • Increasing investment, consumption, and standards of living
  • Economic growth averages 10%
  • Over 200 cities with more than 1 million residents
  • Increasing demand resulting from rapidly rising wages
  • Official language Chinese
  • Time-consuming incorporation process

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Wholly Foreign Owned Enterprises (WFOE) are limited liability companies wholly owned by foreign investor(s), the most typical structure for foreign companies in the PRC.

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Yearly requirements

Tax Filing Obligations for WFOE: annual filing deadline is April 30.  Tax filing is best left to a professional accounting firm.

Year-end Closing Requirements and Annual Audit Report (AAR): Limited companies should submit an annual audit report to the relevant authorities as balance, income, and cashflow statements. Late AAR is subject to penalty. The auditor’s report must be issued by April 30.

Annual License Renewal for WFOE:  Annual inspection is required between March 30 and June 30, on which the Administration of Industry and Commerce bases Business License renewal. The company must provide such documents as the current Business License, Financial Reports, and an Audit Report.