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When you forming a Wholly Foreign Owned Enterprise (WFOE or WOFE) in China, you will encounter the business scope. The China company business scope is very much different from any other countries and must conform to the laws and regulations governing companies, as well as in accordance with national economic and business classifications.
A. Understanding of a China WFOE's Scope of Business
1. The scope of the business word limit
The pages of a company’s business license are limited. As a result, regarding the written word count of the scope of business, there must be requirements. Normally, that requirement is around 100 words.
2. Permitted industry crossover (inter-trade)
People often think that the business scope of the company must be the same as the company name, but that is not so. Business operations may exceed the industry attributes of the company name.
For example, Guangzhou BC Business Consulting Co., Ltd., in addition to business services such as business consulting, business management consulting, and advertising planning, may also have product sales or import and export business.
In other words, the company's business scope can span multiple industries.
3. May increase or decrease business scope items
After the registration of the company is completed, and day-to-day business activities have normalized, the business scope can be increased or decreased at any time. The procedures for changing the company must be followed.
4. Special attributes of the business scopes of foreign-funded enterprises
Since China still adopts an approval system for foreign-funded enterprises, there are certain restrictions on products or services that correspond to certain industries. Therefore, foreign-funded enterprises operating products or services in certain industries require more stringent approvals.
For example, the management of agricultural products and resource products needs approval from the Ministry of Commerce of the People's Republic of China.
The business scope of foreign-funded enterprises can refer to the “Foreign Investment Industry Catalog”.
5. Special industry products or services require the approval of industry authorities
In general, ordinary product sales or consulting services can be accepted directly by the industry and commerce bureau and registered with industry and commerce. However, a product or service that belongs to a pre-approved project needs to be approved by the competent authority of the industry before it can handle the business license.
For example, to operate food retail, you need to go to the health department to get a “Food Hygiene Permit”. You also must first go to the Bureau of Work Safety to obtain a “Dangerous Goods Business Permit” if you are dealing in the trading of dangerous goods. And finally, you must first go to the liquor monopoly to sell alcoholic beverages. That Office handles the "Wine Wholesale License."