Globalization Partners

The “Woofie” and Why Expanding a U.S. Business to China is so Difficult

by Globalization Partners
February 2018
Reading Time: < 1 minute

China is the most populous country in the world, it is home to the second-largest world economy, and U.S. businesses have been trying to expand to China for several years.

And though China is a relatively business-friendly country, there are a few major hurdles when it comes to putting employees in this key market.

To begin, a company would need to establish a Wholly Foreign Owned Enterprise. This is colloquially referred to as a “woofie” in China. To do this, there is a capitalization requirement that can range into 6-figures USD, which must be deposited in local currency.

The problems really start to arise if and when a company needs to get out of its “woofie.” There is a long list of complicated steps a company would have to take to shut down operations legally.

Failure to comply could result in being blacklisted in the country for three years. Even worse, if that “woofie” owes any taxes, fees, or salaries, the company directors could be criminally prosecuted.

Our Global Professional Employer of Record model can help by putting a company’s employees on our payroll without their having to establish a “woofie” in China.

Contact us for more information on expanding to China.

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