How to Open an Export Company in China: A Guide for Foreign Investors
Establishing an export company in China is a powerful strategy for businesses aiming to source products from the world's manufacturing hub. The most efficient and common structure for this purpose is the Wholly Foreign-Owned Enterprise (WFOE). This guide outlines the process, benefits, and key considerations for setting up a trading WFOE focused on export.
What is an Export WFOE?
An Export WFOE is a limited liability company wholly owned by foreign investors. It is licensed to engage primarily in:
· Export: Purchasing goods from Chinese suppliers and selling them to overseas buyers.
· Domestic Trading: Buying and selling goods within China (often necessary for sourcing).
· Import: Importing raw materials or goods for re-export, though its main focus is export.
It is distinct from a Manufacturing WFOE (which produces goods) and a Consulting WFOE (which provides services).
Key Advantages of an Export WFOE
· Full Control: 100% foreign ownership allows for complete control over sourcing, quality control, branding, and profits.
· Limited Liability: Shareholders' liability is limited to their capital contribution.
· Direct Sourcing: Enables direct relationships with factories, eliminating intermediaries and reducing costs.
· Quality Management: Full oversight over production and quality assurance processes.
· RMB and Forex Transactions: Ability to pay suppliers in RMB and receive foreign currency from overseas clients.
· Global Brand Building: Establish your own brand for international markets.
Step-by-Step Process to Establish an Export WFOE
The process typically takes 2-4 months and involves multiple government agencies.
1. Planning and Preparation:
· Define Business Scope: Precisely define your activities (e.g., "wholesale and export of electronic products, textiles, and hardware"). This will be inscribed on your business license.
· Company Name Registration: Reserve a unique company name with the State Administration for Market Regulation (SAMR). The standard format is: [Name] + (City) + [Co., Ltd.].
· Registered Capital: Determine the amount of registered capital. While no official minimum exists for trading companies, a sufficient amount (e.g., USD $50,000 - $100,000+ equivalent in RMB) must be shown to convince authorities of your operational viability. This is a commitment paid over time.
· Registered Address: Secure a physical office address for registration. A virtual office is usually not acceptable.
2. Document Submission and Approval:
· Articles of Association: Draft the company's constitution.
· Application Materials: Prepare documents (application form, legal representative info, director info, etc.) for submission to the local Commerce Commission (MOFCOM) for approval.
3. Post-Approval Procedures:
· Obtain Business License: Receive the official business license from SAMR.
· Engrave Company Chops: Engrave the mandatory company seals (公章 - Official Seal, 财务章 - Financial Seal, 法人章 - Legal Representative Seal). These are legally binding.
· Open Bank Accounts: Open a basic corporate RMB account and a foreign currency account at a Chinese bank.
· Customs Registration: Register with the China Customs Authority to obtain an Import-Export Code, which is essential for clearing goods.
· Tax Registration: Register with the local tax bureau to determine your tax obligations (Corporate Income Tax, Value-Added Tax - VAT). Note: Exported goods are often eligible for VAT rebates (退税), a significant benefit.
· Foreign Exchange Registration: Register with the State Administration of Foreign Exchange (SAFE) to facilitate foreign currency exchanges and transfers.
Key Requirements and Considerations
· Legal Representative: The company must appoint a Legal Representative, who has significant authority and legal responsibility.
· Office Lease: A genuine, physical office lease contract is mandatory.
· Ongoing Compliance: Companies must comply with annual reporting, monthly/quarterly tax filings, and annual audits.
· VAT Rebates: Understanding and applying for VAT rebates on exported goods is crucial for profitability. Professional accounting help is strongly recommended.
Challenges
· Complexity: The process is bureaucratic and can be daunting without local knowledge.
· Capital Requirements: Sufficient registered capital must be demonstrated.
· Cultural and Language Barriers: Navigating supplier relationships and regulations requires local expertise.
Setting up an Export WFOE in China is a significant commitment that offers unparalleled access to Chinese manufacturing and supply chains. It provides the control and flexibility needed to build a successful global export business. Due to the complexities of Chinese regulations, it is highly advisable to engage a reputable corporate service provider or law firm in China to ensure a smooth and compliant setup process.