Wholly Foreign-Owned Enterprise (WFOE)
When targeting direct control over payments/invoicing operations in China, the type of structure required is a Wholly Foreign Owned Enterprise (WFOE, sometimes also referred to as WOFE).
This type of legal entity is a limited liability company with entire foreign ownership. It allows a foreign company to locally conduct business activities in China with customers, clients, and partners, therefore offering the possibility to limit the roles of third-party operators (such as distributors, importers, factories, etc.).
Its main advantage is to incorporate both the employer of record duties and liabilities, along with getting control over local operations. Consequently, this structure maximizes flexibility for doing business in China. It increases the parent company’s local autonomy and controls while enabling profit making
In practice, Entali Consulting can incorporate a WFOE on behalf of a foreign investor while the first staff is already hired through our Employer of Record entity, in order to ensure local presence throughout the entire incorporation process.
Once the company is incorporated and the business license issued, the staff employment ownership is transferred from Entali Consulting umbrella company to the newly created WFOE.