Establishment & Operation of WFOEs in Free Trade Zones

Since 1990, the PRC has established 15 Free Trade Zones, in Shanghai Waigaoqiao, Tianjin Tanggu, Dalian, Qingdao, Zhangjiagang, Ningbo, Guangzhou, Shantou, Shenzhen Shatoujiao, Shenzhen Futian, Shenzhen Yantian, Zhuhai, Xiamen Xiangyu, and Haikou. Free Trade Zones (FTZs) in the PRC are administered in accordance with international free trade zone practices.

To date, an FTZ is the only area in the PRC where a wholly foreign-owned enterprise (WFOE) trading company can be set up. To explain how foreign investment is utilized in an FTZ, we can look at the regulatory regime governing WFOE trading companies in the oldest and biggest FTZs, Shanghai Waigaoqiao Free Trade Zone and Shenzhen Futian Free Trade Zone.