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Forbidden sectors for WFOE in China

Update Date:2021-4-25 15:15:30 Source:BeiJing Tannet Views:950

In China, there are industrial sectors in which the government encourages foreign investment (usually by means of fiscal incentives), sectors restricted to foreigners (or in which a foreign partner can only operate by means of a Joint-Venture with a Chinese counterpart, of which you can usually own no more than 49%) and industrial sectors that are completely prohibited, and therefore inaccessible for foreigners. The prohibited sectors could be summarized as the five major sectors below:

Farming, Forestry, Animal Husbandry, and Fishery Industries;

Mining and Quarrying Industries;

Manufacturing Industry (related to green tea and special tea industry);

Post and Telecommunication Services;

Media Organizations;

Noticeably, foreign investors would benefit from investing in the western part of China as the Chinese government tries to bridge the gap between the southeastern economy and the western economy. Foreign investors in the Sichuan province would have easier and quicker access to the restricted sectors in China.

  The choice of business scope (or industrial sector) is extremely important. This information can be consulted online, on the government page Website:

If you choose a business scope that is too “vast”, the risk that the permit to open the company will be denied increases because the sector in which you wish to operate falls under one of the restricted or prohibited sectors increases proportionately.

If, on the contrary, you choose a business scope that is too “limited” (or too “specific”), your application will probably be approved but, later, you run the risk that the government will force you to close the company because you’re operating outside the scope that you declared at the time of starting the company.

This is why many agencies specializing in helping foreigners open their own company will suggest that you consult a consulting company before you want to start your own business.

Tannet Group Limited was established in Hong Kong by Carlson Chan in 1999. Over 22 years of development, Tannet has assisted international investors through the whole business process. With the help of tax and accounting specialists, we are here to help you navigate China's legal and regulatory system.

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