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Why a Hong Kong entity should own a Chinese WFOE?

Wholly Foreign-Owned Enterprise is an investment vehicle for mainland China based business wherein foreign parties can incorporated a foreign owned limited company.
Unlike most other investment entities in China, there is no need to involve a mainland Chinese investor.

Another advantages that WFOE may bring to your business:

1. The HK has tax treaty with China and witholding tax can be lowered to 5% (compared to 10% with most other cointries incl. US)
2. Chinese officers afe familiar with HK companies and HK corporate structure, which makes dealing with the Chinese administration easier and faster compared to companies from other countries.
3. If you want to change corporate structure, issue new shares or find investor/partner, it is much easier to reflect these changes in your HK company. In mainland to make these changes can be lengthy and needs additional aporovals.

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