Wholly Foreign-Owned Enterprise in China: Why it is the Best Business Formation
by Mashum Mollah Business 12 July 2020
Have you been contemplating taking your business offshore? Growing an enterprise into a foreign destination opens new markets and gives you the force you need to become a multinational. Why watch other top brands raking huge profits when you can also reach there? One of the best jurisdictions to consider when taking your business offshore is China. Why China?
Today, China has emerged as an investment hub because of its commitment to nurturing businesses to success. Unlike in the past when Chinese policies used to discourage foreign investors, the reverse is true. Now, the administration has put a lot of effort into creating world-class infrastructure, entering into many bilateral trade agreements, and offering tax incentives to attract more business in China. These are the benefits that you cannot afford to miss.
To take advantage of these awe-inspiring benefits of the Chinese market, you need to select the right business formation, and the best option is a wholly foreign-owned enterprise (WFOE) in China. In this post, we will take a closer look at the advantages of opening a wholly foreign-owned enterprise.
Total Control over Your Business:
Unlike other business formations such as Joint Ventures that are owned by several parties, opening a WFOE implies that you fully own it. Therefore, you are in full control over the business decisions. For example, there is no risk of selecting the wrong partner, a move that can potentially cripple your growth prospects. Being in full control also implies that you have independence on the following matters:
- Drawing growth strategies.
- Matters of human resources development.
- Managing operations of the company.
A Wholly Foreign-Owned Enterprise is allowed to Employ Both Local and Foreigners:
It is no longer a secret; your business can only be successful if it has the right management, especially at the top. Opening a WFOE in China offers you a better opportunity for growth because you have greater autonomy on who to work with. While most businesses are restricted on the number of foreign employees they can employ from outside China, it is different when it comes to WFOE. You can employ both local and foreign staff with fewer restrictions. This flexibility comes with the following benefits:
- You can easily bridge the skills gap in your team.
- It allows you to improve your business culture.
- Bringing in the persons you can trust is easy.
Profits Made by a WFOE can easily be Remitted Back Home:
When people invest their money in foreign companies, one of the primary expectations is to get some returns on investments (ROI). If you have shareholders back at home who invested their money into the business, a WFOE will be a great option because profits from the company can be remitted with no restrictions. With this fact, more investors back home will also be willing to pump their money into the business if it needs further growth.
When you decide to expand your business into the Chinese market, a WFOE will be the best formation because of the huge autonomy for its operations. To register a WFOE in China, you should consider working with a professional agency because the process is lengthy and involves dealing with multiple agencies.