China WFOE Registration service
Hotline: 86-755-82143348, Email:amyhuang@citilinkia.com
Setting up a Wholly Foreign Owned Enterprise (WFOE) can be a lengthy and complex process. Once a WFOE is set up, opening up branch offices is the easiest way to expand and much less bureaucratic and expensive than setting up a new WFOE. Many supermarket chains use this strategy to expand to local markets.
Generally, it needs to be differentiated between dependant and independent branch office. A dependent branch is not autonomous. It can maintain contacts, can be involved in marketing activities and develop new business relationships but is not allowed to independently participate in business transactions, because it can not issue official invoices (fapiaos). This article is only about independent branches (thereinafter simply referred to as “branch” or “branch office”) as it is the most common form.
Advantages of setting up a branch office instead of relying on the parent company include:
• A branch office has its own business license and seal, is allowed to sign business contracts on its behalf, can have income and hire employees.
• Branch offices can provide invoices (fapiaos) to their customers and have a tax ID
• A branch office has no registered capital. Therefore, compared to setting up new legal entity it is a cost-effective way to expand throughout China
• With a branch office it might be easier to engage in business operations with local companies that are far away from the parent company.
• The branch entitles to apply for working visa and the appropriate Hukou for employees
Some of the disadvantages include:
• The parent company is liable for actions of the branch office
• Business scope is limited and has to be the same as the one from the parent WFOE
• A branch office is not allowed to export or import on its own (even if the business scope of the parent WFOE is trade)
The process of establishing a branch office is similar to setting up a WFOE but much faster and certain steps are not necessarily required (e.g. registration with SAFE).
It usually takes around one month but it might take longer if certain licenses are needed. Before any further steps, the registered capital of the parent company must be verified.
1. Step: Ensure all necessary permissions are in place for the branch registration at the desired premises. This should be done in liaison with the landlord.
2. Step: Apply for business license at the local authority. All necessary application document need to be completed in Chinese.
The most important post- registration procedures:
3. Register at tax authorities.
It is important to register for taxes at the Local and National Tax Bureau. The National Tax Bureaus (and its offices) are responsible for collecting taxes for the PRC government and the local tax bureaus (and offices) are responsible for collecting taxes for local governments.
4. Register at other relevant authorities.
This includes for example: Enterprise code registration with the Quality and Technology Supervision Bureau, foreign exchange registration at the State Administration of Foreign Exchange (if required), registration at the Ministry of Finance (if required) and the National Bureau of Statistics (if required).
5. Register for the necessary stamps of the branch.
This has to be done with the Public Security Bureau. A financial stamp, a branch stamp and a stamp for the person in charge of the branch are required. In China official documents are only valid when they are chopped. Therefore the company stamps functions as a signature.
6. Open a business bank account.
A RMB bank account needs to be opened. Also it is advisable to open a foreign currency bank account.
Contact Us
For further queries, please do not hesitate to contact ATAHK at anytime, anywhere by simply calling China hotline at 86-755-82143348, or emailing to amyhuang@citilinkia.com.