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Shanghai WFOE (wholly foreign owned enterprise) Registration is a business entity formed in China entirely with foreign capital. It is totally under foreign control and does not have any formal Chinese ownership participation. For a foreign company to be able to issue receipts and export goods from China, it must be legally registered as a local company or a WFOE. A WFOE is set up as limited liability entity and represents separate legal persons and is taxed according to local legislation.

Shanghai Representative Office (RO) is established by foreign companies to engage in business liaisons, quality control, product promotion, market research, exchange of technology and other permitted activities in China.

 1, Legal Status

WFOE is with independent legal personality. So, not only natural person but also company can be its investor. Rep Office is just an office of foreign company in China . There are some differences between them.

2, Employees

WFOE can hire Chinese employees by itself. But Rep Office cannot hire China employees directly. Rep Office shall appoint HR companies to do it.

3, Business scope

The business scope of WFOE may be trading, consulting or manufacture. But the business scope of Rep Office is just a liaison between its clients and foreign company. So, Rep Office has not a direct income in China. But it shall pay tax also.

4, Tax

WOFE pays the tax based on income and profit. Rep Office pays tax based on expense. Because China Government think the Rep Office has sent profit to their foreign company indirectly and the offshore profit is duty free in most of countries.

5, Bank account

WFOE can set up a bank account for receiving money from his clients. The bank account of Rep Office just receives money from his foreign company.

6, Expense of business

WFOE runs its business with registered capital from investor and its profit from clients. Rep Office launch business with money received from foreign company.

7, Registered address

The registered address shall be commerce property. And the registered address of Rep Office shall be chosen among buildings appointed by Government.

Tannet Malaysia is an International Consultant Firm based in Hong Kong, Shenzhen. We provide various of business solution to those investor who like to expand their business oversea. We provide international company registration, global trademark registration, company secretarial services, business proposal planning, accounting audit and taxation and etc. Kindly contact us for more information.  

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