Planning a WFOE in China? Don't get caught by hidden fees. Read Asomerit’s transparent guide to China company registration costs, maintenance, and visa requirements.
For many international investors, the massive opportunities in the Chinese market are often accompanied by a cloud of uncertainty—especially regarding money. At Asomerit, a simple yet complex question we frequently receive is: “How much does it actually cost to open a company in China?”
The answer is rarely a single figure. While many agencies may attract attention with extremely low "signup fees," the real cost of running a compliant entity consists of three distinct layers: One-time Setup Costs, Annual Maintenance Costs, and Human Resource Costs.
This guide provides a transparent breakdown of the lifecycle costs for a Wholly Foreign-Owned Enterprise (WFOE)—the most common investment vehicle—and briefly compares it with Representative Office (RO) expenses to help you build an accurate budget.
Part 1: WFOE Setup Costs (One-Time Expenses)
A WFOE is an independent legal entity that allows you to issue invoices, hire staff directly, and repatriate profits. The initial investment to obtain your business license generally falls into five categories.
1. Initial Consulting Service Fees
Unless you are fluent in Mandarin and familiar with Chinese Corporate Law, navigating the registration process alone is risky. Professional consulting firms charge service fees to handle name approval, document drafting, translation, and coordination with the Administration for Market Regulation (AMR).
Here at Asomerit, we offer a free preliminary consultation to help you understand the basic requirements of company establishment at the lowest possible time cost.
2. Registered Address Fees
Chinese law requires every company to have a compliant registered address. Costs vary significantly depending on the city and district.
(1) Virtual Addresses
For consulting firms, tech startups, or trading companies that don't need a physical storefront, using a "Virtual Address" provided by economic zones is the most cost-effective compliant solution.
- Tier 1 Cities (Shanghai, Beijing): Higher demand keeps prices around 6,000 RMB/year or above.
- Tier 2/3 Cities (Suzhou, Chengdu, Hainan): More affordable, typically starting from 4,000 RMB/year.
(2) Physical Office
If you rent a physical office, you must verify a critical detail: Does the office have a "registration quota" available? Many offices, especially in co-working spaces, have limited slots for company registration. Even if you pay rent, you might still need to purchase a separate virtual address for registration if the building's quota is full. Additionally, renting physical space usually requires a 2-3 month rent deposit, adding to your initial cash flow pressure.
3. Government Administrative Fees
To encourage foreign investment, the Chinese government has abolished most official fees (such as license printing fees). However, in some cities, you should still budget a few hundred RMB for carving official company stamps (chops) and filing them with the police bureau.
4. Banking Costs
Once the enterprise is registered, opening a bank account involves several minor but necessary fees:
- Opening Fee: Most banks charge a one-time fee of 500 RMB – 1,000 RMB (some large banks may waive this for small enterprises).
- Maintenance Fee: An annual account management fee, typically a few hundred RMB.
- Online Banking Fee: To handle payroll and transfers, you must activate corporate online banking and purchase security tokens (U-Keys), costing a few hundred RMB per year.
5. Registered Capital
This is the fund investors commit to the WFOE. Two major factors in 2025 affect your budget planning here:
- The "5-Year Rule" (New Company Law): Under the latest Company Law (effective 2024), new companies must fully pay their subscribed registered capital within 5 years of establishment. While you don't need the cash on Day 1, you must plan this as a mandatory future cost.
- Visa Eligibility: As work visa regulations tighten, immigration authorities increasingly look at "Paid-in Capital" to verify a company's legitimacy. For example, cities like Suzhou often require a registered capital above 1 million RMB (with >30% foreign investment) for the investor to qualify for a Work Permit as the company investor .
Our Advice: If you do not meet the "2 years experience + Bachelor's degree" exemption for a work visa, you may need to increase your registered capital commitment to support your visa application.
Part 2: Annual Operational & Maintenance Costs
Once established, compliance is non-negotiable. Even if your company has zero revenue, you must file monthly tax returns.
1. Bookkeeping and Tax Filing
Chinese Accounting Standards (CAS) differ from international norms. You must maintain compliant books and file taxes monthly or quarterly. The service fees for bookkeeping are typically determined based on your company's annual turnover, the volume of invoices to be issued, and your VAT taxpayer type.
- Small-scale Taxpayer: For startups with simple business operations, outsourced bookkeeping fees generally range from 6,000 RMB – 9,000 RMB per year.
- General Taxpayer : For trading or manufacturing companies requiring detailed VAT input/output deductions, fees typically start from 12,000 RMB – 15,000+ RMB per year.
2. Annual Audit & Reporting
Chinese companies are required to submit an annual report to the Administration for Market Regulation (AMR) before the end of June each year. During this process, we strongly recommend that all WFOEs simultaneously submit an annual audit report conducted by a Chinese CPA. This is particularly critical if you intend to repatriate your WFOE's profits overseas, as you must submit this audit report to both the bank and the tax bureau to authorize the transaction.
The cost of an annual audit is generally a few thousand RMB (e.g., around 5,000 RMB), and you should factor this into your company's standard operational costs. Attempting to save this small amount often leads to significantly higher compliance risks, which is ultimately not worth the potential consequences.
Part 3: Human Resource (Employment) Costs
This is the area most often underestimated by foreign investors. In China, an employee's "Gross Salary" is not the total amount the company pays. Given China's social security system, you must calculate the Total Cost of Employment (TCE).
To give you a concrete example, let's assume you hire a manager in Beijing with a gross monthly salary of 20,000 RMB. In addition to the salary, the employer is legally required to contribute to Social Insurance (Pension, Medical, Unemployment, Injury, Maternity) and the Housing Provident Fund. In Tier 1 cities, this additional expenditure accounts for approximately 35% - 40% of the gross salary.
- Gross Salary: 20,000 RMB
- Social Insurance (~27%): ~5,400 RMB
- Housing Fund (~12%): ~2,400 RMB
- Actual Company Monthly Cost: ~27,800 RMB
If you want to understand China's social insurance system or learn exactly how employee social insurance is calculated, you can click here to view our previous blog post.
At the same time, if you plan to apply for a work visa yourself, or if your company intends to hire foreigners, you also need to factor in the cost of applying for a China Work Visa. This generally includes three parts:
- Material preparation and authentication fees: you need to prepare necessary application materials (such as academic certificates, non-criminal records) and have them notarized and authenticated;
- Application service fees: if you choose to cooperate with an intermediary service provider, which will incur a fee of several thousand RMB;
- Government fees: government departments charge a few hundred RMB for entry visas at embassies and residence permits within China.
The Alternative – Representative Office (RO)
Some investors view a Representative Office (RO) as a "cheaper" shortcut. While setting up an RO is slightly simpler, it is functionally restricted: It cannot earn profit, issue invoices, or sign sales contracts. It is strictly for market research and liaison.
Crucially, an RO is not necessarily cheaper to maintain. First, there is the tax on expenses; since an RO has no revenue, tax authorities levy tax based on your operational expenses (Rent + Salaries), which often results in a higher effective tax burden than a WFOE that hasn't made a profit yet. Second, there are hiring restrictions; an RO cannot hire staff directly. You must use a third-party dispatch agency (like FESCO), which adds a mandatory service fee on top of every employee's salary.
For investors planning to conduct commercial activities, the WFOE remains the optimal choice for long-term value. However, for those strictly engaging in non-profit market research who want a simple physical presence, an RO can still be a viable option.
Not Ready for a WFOE? Test the Market with EOR Services
Does the list of setup fees, annual audits, and compliance costs detailed above seem "asset-heavy" for your current stage?
If you are still in the market validation phase, or simply need to place 1-2 sales representatives in China to test demand, registering a full company immediately might be an over-commitment. Not only are the maintenance costs high, but the deregistration process (if you decide to exit) can be lengthy and complex.
For this scenario, Asomerit’s Employer of Record (EOR) service acts as your low-risk launchpad:
- Zero Setup Costs: You do not need to register a legal entity, rent an office, or inject capital. Asomerit acts as the legal "Employer" in China, signing labor contracts with your candidates on your behalf.
- Total Risk Isolation: We handle the entire compliance lifecycle—from mandatory social security contributions and housing funds to monthly Individual Income Tax (IIT) filings. You simply manage your employee's day-to-day performance.
- Flexible Entry & Exit: This is the ideal model for "testing the waters." If the market responds well, we can help you transition your team to a new WFOE smoothly later; if the test fails, you can exit the market easily without facing the nightmare of complex company liquidation procedures.
Conclusion: Investing in Clarity
Entering the Chinese market is a strategic marathon, not a sprint. While it is tempting to focus solely on the lowest initial registration quote, the long-term success of your business depends on a realistic understanding of the Total Cost of Operation. From the "hidden" annual compliance fees to the nuances of social insurance and the rigid capital requirements of the 2025 Company Law, every RMB planned for today prevents a compliance headache tomorrow.
Whether you choose a WFOE for full operational control or an RO for market exploration, the key to a smooth entry is transparency.
Why Choose Asomerit Consulting? At Asomerit, we don't just hand you a business license; we help you build a sustainable roadmap. We pride ourselves on Transparent Pricing—what we quote is what you pay. There are no hidden "renewal fees" or surprise "service charges."
Are you ready to build a budget that works? Contact Asomerit Consulting today for a free, customized cost simulation tailored to your specific industry and location. Let us handle the complexities of compliance so you can focus on growing your business in China.
