Manufacturing Export Goods in China

The established presence of a foreign company in China normally takes one of two forms that being either a Wholly Foreign Owned Enterprise (WFOE) or a representative office (Rep Office). A WFOE has a far wider scope of operation than a representative office, which by its very nature is restricted as to what it can do. For example, a WFOE can enter into product purchase agreements with other companies, import and export products without the help of other trading companies, and employ its local employees. A rep office, by contrast, is limited to liaison activities and cannot directly enter into contracts or provide services; a rep office may only employ local Chinese employees through local service companies.

In relation to investment requirements as an independent legal entity, a WFOE is required to have certain amount of investment from the parent company which can support its business operation. According to the PRC Company Law(中华人民共和国公司法), the minimum registered capital of a WFOE is RMB100,000. By contrast, there is no minimum requirement for the registered capital of a rep office as long as the operating expenses paid by the parent company are sufficient for its daily operations.