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Dear CBBC,

I am a businessman who wants to set up a company in China, but I don’t know if I should open a FICE or a WFOE?

Regards,

Nigel Brown

A WFOE (Wholly Foreign Owned Enterprise) is a limited liability company wholly owned by one or more than one foreign investor(s). A WFOE requires registered capital and allows the owners to generate income, pay tax in China and for profits (dividends) to be repatriated back to the investor's home country.

If a WFOE is allowed to conduct trading, wholesale, or retail in China, subject to its business scope approved by the authority, it is called a Trading WFOE or FICE (Foreign-Invested Commercial Enterprise).

A FICE can distribute imported and/or locally manufactured products through their own wholesale, retail and franchise systems and provide a host of related services.

The difference between a WFOE and a FICE is that a FICE might be a WFOE which has distribution rights (i.e., import, export, wholesale and/or retail rights) included in its business scope.

The advantage of establishing a FICE is that the company can register an address anywhere in mainland China. Additionally, the company and its foreign investor(s) are not required to use an Import/Export agent and the FICE can issue VAT invoices to local agents.

Answered by Zhang Jun Chao, CBBC Shanghai.

Got a query? Send your questions to enquiries@CBBC.org

 

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