Difference between the Rep Office and WFOE in Quanzhou
Quanzhou WFOE (wholly foreign owned enterprise) Registration is a business entity formed in China entirely with foreign capital. It is totally under foreign control and does not have any formal Chinese ownership participation. For a foreign company to be able to issue receipts and export goods from China, it must be able to legally registered as a local company or a WFOE. A WFOE is set up as limited liability entity and represents separate legal persons and is taxed according to local legislation.
Quanzhou Representative Office (RO) is established by foreign companies to engage in business liaisons, quality control, product promotion, market research, exchange of technology and other permitted activities in China.
1. Legal Status
WFOE is with independent legal personality. So, not only natural person but also company can be its investor. Rep Office is just an office of foreign company in China . There are some differences between them.
WFOE can hire Chinese employees by itself. But Rep Office can not hire China employees directly. Rep Office shall appoint HR companies to do it.
3. Business scope
The business scope of WFOE may be trading, consulting or manufacture. But the business scope of Rep Office is just a liaison between its clients and foreign company. So, Rep Office has not a direct income in China . But it shall pay tax also.
WOFE pays the tax based on income and profit. Rep Office pays tax based on expense. Because China Government think the Rep Office has sent profit to their foreign company indirectly and the offshore profit is duty free in most of countries.
5. Bank account
WFOE can set up a bank account for receiving money from his clients. The bank account of Rep Office just receives money from his foreign company.
6. Expense of business
WFOE runs its business with registered capital from investor and its profit from clients. Rep Office launch business with money received from foreign company.
7. Registered address
The registered address shall be commerce property. And the registered address of Rep Office shall be chosen among buildings appointed by Government.
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