(Please note that the procedures set out below for establishing a WFOE may differ depending on the location of the WFOE. )
Step 1: Reservation of the WFOE Company Name

Prior to any of the following applications, foreign investors should reserve a name for its prospective WFOE with the local Administrative Bureau for Industry and Commerce (“SAIC”). This is called “Name Pre-registration” in China.
SAIC requires that a proposed name and two alternative names be provided.

Step 2: Project Proposal and Approval

According to the PRC WFOE Law and its Implementing Rules as amended in April 2001, there should be a Project Proposal Approval stage before the final examination and approval. In practice, however, these two stages have been combined as one.

2.1 Project Proposal

The foreign investor is required to submit a Project Proposal to the local approval authority (“Approval Authority”) where it intends to establish the WFOE. Generally, the Project Proposal should cover the following points:

(a) the purpose of the WFOE, production plan and market forecasting;
(b) the scope and scale of the business, the products to be produced / services to be provided (a 4-5 line description should suffice);
(c) financing, financial forecasts and evaluations;
(d) the technology and equipment to be used;
(e) land-use requirements (including the area), selection of sites;
(f) personnel and wages; and
(g) any requirements for public facilities (water, electricity, coal, gas or other energy source).

2.2 Examination and Approval

The following documents should be also be submitted to the local Approval Authority:

(a) a written application for the establishment of the WFOE;

(b) a Feasibility Study Report. Based on our experience, this is generally a 20 page document;

(c) the Articles of Association of the proposed WFOE;

(d) a list of the proposed chairperson and the members of the WFOE board of directors, and appointment letters;

(e) the incorporation document of the WFOE investor;

(f) a credit certificate of the WFOE investor issued within 3 months;

(g) lease agreement for the premises. Based on our experience, an actual executed lease agreement is not required and it is generally acceptable and common for the WFOE investor to merely show an intention to enter into a lease agreement by entering into a space reservation agreement with the landlord;

(h) the reply of pre-registration of name approved by the relevant SAIC; and

(i) such other documents as may be required by the Approval Authority.

As for the timing of approval, Approval Authorities are required to make its decision within 90 days from receipt of all the documentation. However, many local Approval Authorities are able to give its decision within 5 to 15 working days upon receiving all the required documentation.

Step 3: Registration for Business License

Within 30 days after obtaining the approval certificate, the foreign investor will need to register and apply for a business licence for the WFOE from the local SAIC. As part of this step, the foreign investor will need to submit similar documentation to the approval documentation for SAIC filing purposes. This is purely a procedural step and the local SAIC must issue the Business License within 30 days, but in our experience SAIC will usually issue the Business Licence within 5-10 days after receiving all the required documentation.

Once the business license is issued, the WFOE is deemed to be a legal person duly organised and existing under PRC law and will have full operational rights to operate a business in China within the scope of its Business Licence.

Step 4: Post business license registration procedure with other government Authorities

Registration is also required with other government authorities such as tax bureau, Foreign Exchange Control and Customs and so on. Some of the post-established is listed below:

(1) Making of Office Stamp (Office Seal)
(2) Opening of bank accounts
(3) Registration with the State Tax Bureau
(4) Registration with the Local Tax Bureau
(5) Application of “Enterprise Code” and card
(6) Registration with of Foreign Exchange Control Authority
(7) Registration with Custom

Registration for staff welfare:

(1) Registration for all staff in Labour and Social Security Bureau when the company first opens its account.

(2) Labour and Social Security Bureau will confirm the welfare details for every individual employee such as: the salary bases for pension, medicine insurance, injury insurance, unemployment insurance and maternity insurance (only for female employees)

(3) Social Security card and bank note.

(4) Registration in Housing Fund Management Center. Open company account and register for all employees.

(5) Housing fund card and bank note.

Step 5: Various online code application

For tax return filing and online payment purpose, various system need to download and register online.

(1) Tax certificate (CA certificate) system-for all tax payments

(2) Individule income tax system – for IIT filing

(3) Corporation tax system – for CIT filing

(4) Social security system

(source: GT-Start up in China)