Business China

China WFOE Formation: Business Scope Explanation

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When you forming a Wholly Foreign Owned Enterprise (WFOE or WOFE) in China, you will encounter the business scope. The China company business scope is very much different from any other countries and must conform to the laws and regulations governing companies, as well as in accordance with national economic and business classifications.

China wfoe Formation: Business Scope Explanation

A. Understanding of a China WFOE's Scope of Business

1. The scope of the business word limit

The pages of a company’s business license are limited.  As a result, regarding the written word count of the scope of business, there must be requirements.  Normally, that requirement is around 100 words.

2. Permitted industry crossover (inter-trade)

People often think that the business scope of the company must be the same as the company name, but that is not so. Business operations may exceed the industry attributes of the company name.

For example, Guangzhou BC Business Consulting Co., Ltd., in addition to business services such as business consulting, business management consulting, and advertising planning, may also have product sales or import and export business.

In other words, the company's business scope can span multiple industries.

3. May increase or decrease business scope items

After the registration of the company is completed, and day-to-day business activities have normalized, the business scope can be increased or decreased at any time.  The procedures for changing the company must be followed.

4. Special attributes of the business scopes of foreign-funded enterprises

Since China still adopts an approval system for foreign-funded enterprises, there are certain restrictions on products or services that correspond to certain industries. Therefore, foreign-funded enterprises operating products or services in certain industries require more stringent approvals.

For example, the management of agricultural products and resource products needs approval from the Ministry of Commerce of the People's Republic of China.

The business scope of foreign-funded enterprises can refer to the “Foreign Investment Industry Catalog”.

5. Special industry products or services require the approval of industry authorities

In general, ordinary product sales or consulting services can be accepted directly by the industry and commerce bureau and registered with industry and commerce. However, a product or service that belongs to a pre-approved project needs to be approved by the competent authority of the industry before it can handle the business license.

For example, to operate food retail, you need to go to the health department to get a  “Food Hygiene Permit”.  You also must first go to the Bureau of Work Safety to obtain a “Dangerous Goods Business Permit” if you are dealing in the trading of dangerous goods.  And finally, you must first go to the liquor monopoly to sell alcoholic beverages. That Office handles the "Wine Wholesale License."

B. The "Company Law" Provisions of the Scope of Business

1. The business scope of the company is regulated by the company's articles of incorporation. The company cannot apply for registration beyond the business scope stipulated in the articles of association.

2. The business scope of the company must be legally registered. That is to say, the business scope of the company is subject to the approval of the registration authority. The company shall engage in business activities within the scope of business approved by the registration authority.

3. Projects within the company's business scope that fall within the limits of laws and administrative regulations must be approved according to law before being registered.

C. China WFOE Business Scope Considerations

Business China organizes its business scope for in the following categories

Service company business scope

1. China Service WFOE
Corporate image planning, technical services in the field of computer science, computer network engineering, technical services in the field of communications, technical services in the field of biochemical engineering, computer graphic design and production, exhibition services, photography services, market research, translation services, etiquette services, Public relations activities planning, cleaning services, wedding etiquette services, catering management, municipal engineering supporting services, property management, real estate development, logistics, freight forwarding, shipping services, maritime consulting services, and house repairs.

2. China Consultation WFOE

Real estate information consulting, financial consulting, investment consulting, business consulting, travel consulting, financial consulting, housekeeping consulting, labor consulting, investment management consulting, investment management, corporate management consulting, corporate marketing consulting, human resources consulting, education information consulting, legal Information consultation, book information consultation, medical information consultation, medical equipment technology information consultation, medical treatment, kitchen product use service consultation, culture and art consultation, car rental, automobile investment consulting, etc.

According to the relevant provisions of China's existing "Company Law", the company's business scope is determined by the company itself and is regulated by the company's rules and regulations.

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