Company setup · Shanghai
WFOE registration in Shanghai.
What it takes, step by step.
A wholly foreign-owned enterprise (WFOE) is the structure most foreign founders use to hire, invoice and trade in China under their own control. This guide explains when you need one, how registration works in Shanghai, and what continues after the licence.
01 · The basics
What a WFOE is
A WFOE is a Chinese limited liability company whose shares are held entirely by foreign investors: one or more foreign individuals, or an overseas company. Since the Foreign Investment Law took effect in 2020, “WFOE” is a commonly used name rather than a separate legal category; the company is registered and governed under the Company Law like a domestic company.
Because it is a Chinese legal entity, a WFOE can sign contracts in China, issue official invoices (fapiao), employ local and foreign staff, hold a resident corporate bank account, and distribute after-tax profits to its foreign shareholders.
02 · Choosing a structure
WFOE, joint venture or representative office?
| WFOE | Joint venture | Representative office | |
|---|---|---|---|
| Ownership | 100% foreign | Shared with a Chinese partner | Not a separate company; an office of the overseas parent |
| Invoice and earn revenue in China | Yes | Yes | No; liaison and market research only |
| Control | Full control by the foreign investor | Shared, as set in the joint venture agreement | Parent company |
| Typical use | Most small and mid-sized foreign businesses | Restricted sectors, or where a local partner brings licences or customers | Early market exploration |
Do you need a company at all? If you only need to receive or make payments with Chinese counterparties and do not need staff, fapiao or domestic sales, an overseas company can apply for a non-resident NRA or FTN bank account instead. Many founders start that way and set up a WFOE later.
03 · Before you file
Decisions to make first
- Is your business open to foreign investment? Check the national Negative List. The 2024 edition, in force since 1 November 2024, removed all remaining foreign-investment restrictions in manufacturing. Sectors outside the list follow the same rules as domestic companies, although many activities still need an industry licence. [1]
- Business scope. What the company may legally do is set by its registered business scope. Write it around what you will actually sell, including import and export if you will trade goods.
- Registered address. The address must be genuine commercial premises acceptable to the registration authority. The district affects incentives, review practice and practical logistics.
- People. Decide the shareholders, the legal representative, the director or board, and the supervisor. The legal representative carries personal legal responsibility and usually attends the bank.
- Registered capital. See section 05 below.
04 · Registration
How registration works in Shanghai
- Name and scope check with the market regulation authority.
- Lease for the registered address and supporting property documents.
- Investor documents. Passports for individual investors; certificates of incorporation and resolutions for corporate investors. Documents from countries in the Apostille Convention, which China joined in November 2023, generally need an apostille instead of consular legalisation.
- Business licence issued by the Shanghai market regulation authority. Foreign-investment information is reported through the registration system.
- Company seals carved and filed.
- Bank accounts: an RMB basic account and a foreign-currency capital account to receive capital from abroad.
- Tax registration and invoicing set-up, followed by social insurance and housing fund accounts when you hire.
Timeline: for a typical WFOE in Shanghai, plan for 4 to 8 weeks from document submission to a usable bank account. The business licence often arrives in 2 to 3 weeks; the bank account is usually the slowest step.
05 · Registered capital
The five-year capital rule
Under the revised Company Law, in force since 1 July 2024, shareholders of a limited liability company must pay their subscribed capital in full within five years of incorporation. [2]
Choose an amount that covers your real costs until the business earns revenue, such as rent, salaries and set-up costs. An inflated figure creates a legal payment obligation; an unrealistically small one can raise questions from banks and when applying for work permits. Capital is usually paid in through the foreign-currency capital account.
06 · After the licence
What continues every month and year
- Bookkeeping and tax filings every month or quarter, even when there is no revenue.
- Annual reporting to the market regulation authority between 1 January and 30 June each year, and the annual statutory audit commonly expected of foreign-invested companies.
- Payroll, social insurance and housing fund for employees.
- Work and residence permits for foreign staff, including the founder if you will work in China.
For the full calendar and legal deadlines, see China company annual compliance. For ongoing support, see accounting and tax services in Shanghai.
07 · Questions
Questions foreign founders ask
Can a foreign individual own a WFOE, or does it need an overseas company?
Either can be the investor. A WFOE can be wholly owned by one or more foreign individuals, or by an overseas company such as a Hong Kong holding company. The choice affects documents, tax planning and how you may later restructure, so it is worth deciding before filing.
Do I need to be in China to register?
Most filings can be handled under a power of attorney. Opening the corporate bank account usually requires the legal representative to attend in person, so we plan the timeline around one trip.
Is there a minimum registered capital?
For most sectors there is no statutory minimum. Under the Company Law in force since 1 July 2024, a limited liability company must pay its subscribed capital within five years of incorporation, so choose an amount that matches your real plans.
Can the WFOE sponsor my work permit?
A WFOE can apply for a work permit and residence permit for a foreign employee, including a founder. The authorities look at whether the company is genuinely operating, so plan for a gap between registration and your permit.
Sources and scope
- Ministry of Commerce interpretation of the Special Administrative Measures for Foreign Investment Access (Negative List), 2024 edition — Chinese government website (Chinese).
- Company Law of the People’s Republic of China (revised 2023, effective 1 July 2024) — National People’s Congress (Chinese).
General information only. Requirements for your sector, district and investors should be confirmed before filing.