A Trading WFOE (also called a Commercial WFOE or FICE - Foreign-Invested Commercial Enterprise) is a WFOE licensed to engage in import, export, wholesale, and retail activities. It is the entity of choice for foreign companies that want to import goods into China and sell them domestically.
Trading WFOE vs Consulting WFOE
| Feature | Trading WFOE | Consulting WFOE |
|---|---|---|
| Business scope | Import/export, wholesale, retail, distribution | Consulting, tech services, management |
| Import/Export license | ✅ Yes | ❌ No |
| Issue goods fapiao (13% VAT) | ✅ Yes | ❌ No (6% service fapiao only) |
| Customs registration | ✅ Required | ❌ Not needed |
| Registered capital | ¥500K-1M+ (practical) | ¥100K-500K (practical) |
| Setup time | 3-5 months (longer for trade licenses) | 2-4 months |
| Best for | Importers, distributors, traders | Consultants, tech, services |
Trading WFOE Registration Process
- Register the WFOE with business scope including "import and export of goods" (货物进出口) and "domestic trade" (国内贸易).
- Obtain Import/Export License: File with MOFCOM (Ministry of Commerce) for Foreign Trade Operator Registration (对外贸易经营者备案).
- Customs registration: Register with the local Customs office for a Customs Registration Certificate (海关报关单位注册登记证书).
- Open FX accounts: Foreign Exchange Capital Account + Current Account (for trade settlement).
- Register with SAFE: Foreign exchange registration for trade transactions.
- Electronic Port IC card: Apply for the China E-Port IC card (电子口岸IC卡) for customs declaration filing.
- Inspection & quarantine: Register with CIQ (if importing goods that require inspection).
Additional timeline: 4-8 weeks on top of the standard WFOE registration.
Import Process for a Trading WFOE
- Sign purchase contract with overseas supplier.
- Open Letter of Credit (L/C) or arrange payment through FX account.
- Customs declaration: File import declaration via China E-Port system.
- Pay customs duty + import VAT (13% on most goods).
- CIQ inspection (if applicable for your product category).
- Goods released from customs bonded zone/port.
- Sell domestically and issue 13% VAT special invoice to customers.
VAT recovery: Import VAT (13%) paid at customs can be deducted as input VAT when the trading WFOE sells goods domestically. This makes a Trading WFOE with general taxpayer status more tax-efficient than using a trading agent.
Registered Capital for Trading WFOE
While there is no legal minimum, practical considerations:
- Customs: May require proof of ¥500K+ capital for import registration
- Banks: FX account opening often requires ¥500K+ injected capital
- Suppliers: Overseas suppliers may require proof of financial capacity
- SAFE: FX settlement limits may be based on registered capital
- Recommended: ¥1M-3M for a serious trading operation
Tax Treatment for Trading WFOEs
| Tax | Rate | Notes |
|---|---|---|
| VAT on domestic sales | 13% | Output VAT minus input VAT (including import VAT) |
| Import VAT | 13% | Can be deducted as input VAT |
| Customs duty | 0-100% | Depends on HS code + origin (FTA may reduce) |
| CIT | 25% (15% if HNTE) | Standard corporate tax |
| Consumption tax | Varies | Only for specific goods (luxury, tobacco, alcohol) |