Wholly Foreign Owned Enterprise
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The Wholly Foreign Owned Enterprise or 'WFOE' is a common investment vehicle for mainland China-based business. The unique feature of a WFOE is that involvement of a mainland Chinese investor is not required unlike most other investment vehicles. This can give greater control over the business venture in mainland China and avoid a multitude of problematic issues which can potentially result from dealing with a domestic joint venture partner.
Such problems often include profit not being maximised, leakage of the foreign firm's intellectual property and the potential for joint venture partners to set up in competition against the foreign firm. However, WFOEs often have difficulty building up the necessary personal relationships or 'guanxi' which are of great importance in conducting business in mainland China.
WFOEs are often used to produce the foreign firm's product in mainland China for later export to a foreign country. They do not automatically have right to distribute their products in mainland China though a recent variant (the Foreign Invested Commercial Enterprise WFOE) has the ability to do so.
[edit] References
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This article includes a list of references, related reading or external links, but its sources remain unclear because it lacks inline citations. Please improve this article by introducing more precise citations where appropriate. (April 2009) |
- Kenneth Wong (2006-07-24). "Introduction to Wholly-Owned Foreign Enterprises". Blog. Singapore Entrepreneurs. http://sgentrepreneurs.com/contributors-corner/2006/07/24/wholly-foreign-owned-enterprises-china/. Retrieved 2008-01-15.
- Smith Regev (2004-07-28). "Details about Wholly Foreign Owner Enterprise". WFOE.ORG. http://wfoe.org/. Retrieved 2008-09-02.
[edit] External links
- Standing Committee of the National People's Congress (2000-10-31). "Law of the People's Republic of China on Wholly Foreign Owned Enterprises". Lehman, Lee & Xu. http://www.lehmanlaw.com/resource-centre/laws-and-regulations/foreign-investment/law-of-the-peoples-republic-of-china-on-wholly-foreign-owned-enterprises-2000.html. Retrieved 2008-01-28.
- "Procedures on Wholly Foreign Owned Enterprises setting up in China". Path To China. http://www.pathtochina.com/reg_wfoe.htm. Retrieved 2008-04-17.
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