China Import and Export Licensing: How Foreign Companies Can Set Up a Trading WFOE

Can Foreign Companies Import and Export in China?

Yes — foreign-invested enterprises in China can engage in import and export activities, and a Wholly Foreign-Owned Enterprise (WFOE) structured as a trading company is the most common vehicle for doing so. Under the current Foreign Investment Law regime, foreign-invested companies receive the same treatment as domestic Chinese companies when it comes to trading rights, subject only to sector-specific restrictions listed on the Negative List.

For foreign companies that want to source products from China for export to overseas markets, import goods into China for domestic distribution, or operate a cross-border e-commerce business, setting up a Trading WFOE — sometimes called a Foreign-Invested Commercial Enterprise (FICE) — is the standard approach. The registration process involves not only the usual company incorporation steps but also a series of trade-specific registrations with Customs, the tax authorities, and the State Administration of Foreign Exchange (SAFE).

This article walks through the complete process, from company incorporation through full trading readiness, with practical guidance based on our experience registering trading companies for foreign clients in Guangzhou, Shenzhen, Foshan, Dongguan, and Jiangmen.

What Is a Trading WFOE?

A Trading WFOE is a limited liability company incorporated in China with 100% foreign ownership, whose registered business scope includes the import and export of goods — and, optionally, wholesale, retail, and distribution within China. The company can:

• Import goods into China: Purchase products from overseas and sell them to Chinese distributors, retailers, or end customers
• Export goods from China: Source products from Chinese manufacturers and export them to overseas buyers
• Issue VAT invoices (fapiao): A legally registered trading company can issue Chinese VAT invoices to customers, which is essential for B2B transactions in China
• Receive and make payments in foreign currency: With proper SAFE registration, the trading WFOE can receive overseas payments and remit profits, dividends, and trade-related payments
• Manage cross-border logistics: The company can contract with freight forwarders, customs brokers, and warehousing providers to manage its supply chain

The scope of a trading WFOE must be precisely defined in its business license. For example, a typical scope for an import-focused trading company might read: “Import and export of electronic components; wholesale and retail of consumer electronics; technology consulting services; supply chain management.” Any activity outside the registered scope is technically prohibited and can lead to compliance problems.

Step 1: Incorporate the WFOE

The first step is identical to any WFOE registration: incorporate a limited liability company with the local Administration for Market Regulation (AMR). The requirements include:

• Approved company name (following the standard naming convention)
• Registered address in a commercially zoned property — this is particularly important for trading companies because Customs and the tax bureau will inspect the address during subsequent registration steps
• Notarized and authenticated parent company documents
• Articles of association specifying a business scope that includes import and export activities
• Appointment of a legal representative, executive director or board of directors, supervisors, and general manager
• Registered capital — for trading WFOEs, we generally recommend a minimum of RMB 1 million, though the specific amount depends on the projected transaction volume and the requirements of potential Chinese business partners

The entire incorporation process — from name pre-approval to business license issuance — typically takes 10 to 20 business days in Guangzhou and Shenzhen. Foshan, Dongguan, and Jiangmen may process applications slightly faster due to lower application volumes.

Step 2: Obtain Import and Export Filing

After the business license is issued, the company must complete a filing for Foreign Trade Operator Rights with the local branch of the Ministry of Commerce (MOFCOM). This step has been significantly streamlined in recent years. In many cities, the filing is now integrated into the AMR registration process — meaning the company receives its foreign trade operator status automatically upon incorporation. In other cities, a separate online filing is still required.

The filing typically requires:

• Business license (scanned copy)
• Legal representative identification
• Completed foreign trade operator registration form
• Company chops

Processing time is usually 3 to 5 business days. Once approved, the company receives a Foreign Trade Operator Filing Certificate, which is the gateway document for all subsequent trade registrations.

Step 3: Customs Registration

With the foreign trade operator filing in hand, the company registers with China Customs. This registration assigns a 10-digit Customs Registration Code, which the company will use for all import and export declarations. The application is submitted through the China Customs online portal and typically requires:

• Business license
• Foreign Trade Operator Filing Certificate
• Company chops
• Legal representative and customs declarant identification documents
• Proof of registered address

Customs may conduct an on-site inspection of the registered address — particularly for newly established companies — to verify that the company has a genuine physical presence. A serviced office or virtual address that cannot accommodate a Customs visit may cause the application to be rejected. This is a critical detail that companies should plan for when selecting a registered address.

Processing time for Customs registration is typically 5 to 10 business days. Once completed, the company receives its Customs Registration Certificate and is assigned a Customs Declaration Code.

Step 4: Electronic Port Card and Inspection & Quarantine

The next step is applying for the China Electronic Port Card — an IC card and associated digital certificate that allows the company to file electronic customs declarations through the China Single Window platform. This application is submitted at the local Data Center of China E-Port.

Requirements include:

• Business license
• Customs Registration Certificate
• Foreign Trade Operator Filing Certificate
• Legal representative and operator identification
• Completed application forms

Processing time is typically 5 to 7 business days. The company will receive one Corporate Card (also called a master card) and one or more Operator Cards, each secured by a USB key for digital signing of customs declarations.

Additionally, if the company will import or export goods subject to inspection and quarantine requirements — which covers a large range of products including food, cosmetics, electronics, textiles, and machinery — it must also register with the China Inspection and Quarantine (CIQ) authorities. This registration is now generally integrated with the Customs registration since the 2018 merger of CIQ into China Customs, but separate product-specific registrations may still be required depending on the commodity.

Step 5: Foreign Exchange Registration

For a trading company to receive and make foreign currency payments, it must be registered in the SAFE system. The company’s bank — typically the bank where it opens its corporate accounts — handles this registration through SAFE’s online system.

The process involves:

• Opening a corporate RMB basic account
• Opening a foreign currency capital account (for receiving overseas payments)
• Registering the company’s foreign trade operator status in the SAFE system through the bank
• Completing any required trade-related filings (such as the initial listing for trade in goods)

SAFE classification is important: trading companies are assigned a risk category (A, B, or C) based on their compliance history. Category A companies enjoy streamlined foreign exchange processing, while Categories B and C face additional documentation requirements and longer processing times for each foreign exchange transaction. Maintaining good compliance from day one is essential to preserving Category A status.

Import Licensing for Regulated Products

While many consumer and industrial goods can be imported without special licenses, a significant number of product categories require import permits, licenses, or registration certificates from specific government agencies. Examples include:

• Food and beverages: Registration with the General Administration of Customs (GAC) under the Registration System for Overseas Food Manufacturers; Chinese labeling compliance
• Cosmetics: Notification filing or registration with the National Medical Products Administration (NMPA), depending on the product classification
• Medical devices: Registration with the NMPA, classified into Classes I, II, and III with increasing regulatory requirements
• Electronic products: China Compulsory Certification (CCC) for products listed in the CCC catalogue
• Chemicals: Registration with the Ministry of Ecology and Environment under the Measures on Environmental Management of New Chemical Substances
• Agricultural products: Import permits from the Ministry of Agriculture and Rural Affairs, quarantine permits, and GMO certificates where applicable

Importers should research the regulatory requirements for their specific product categories well before initiating the company registration process, as some product registrations can take months to obtain and must be held by a locally registered entity.

VAT on Imports and Exports

Understanding VAT treatment is critical for a trading WFOE’s financial planning:

Imports: Import VAT (typically 13% for most goods) is collected by Customs at the point of entry along with any applicable customs duties. The import VAT paid can generally be credited against output VAT on domestic sales — a key cash flow consideration. Customs duties, however, are not creditable and represent a real cost.

Exports: Goods exported from China are generally VAT zero-rated, meaning no output VAT is charged on export sales, and the exporter can claim refunds on input VAT incurred on raw materials and services used to produce or acquire the exported goods. The VAT refund rate varies by product category and is published by the State Taxation Administration and the Ministry of Finance. Rates range from 0% to 13%. A product with a 0% refund rate effectively means the input VAT becomes a cost — a critical factor in export pricing and competitiveness.

Domestic sales: Sales by a trading WFOE to Chinese customers are subject to standard VAT rates (13% for most goods, 9% for books and agricultural products, 6% for services). The company must issue VAT invoices (fapiao) to customers and remit output VAT to the tax bureau, net of deductible input VAT.

Common Pitfalls and Compliance Tips

Based on our experience with hundreds of trading WFOEs across Guangdong province, these are the most common issues we see:

Underestimating registered capital: A trading company with insufficient registered capital may struggle to open letters of credit, secure supplier credit terms, or pass the due diligence of Chinese customs brokers and freight forwarders. Factor your anticipated transaction volumes into the capitalization decision.

Incomplete business scope: If your trading WFOE’s scope only covers “import and export” but you later want to sell domestically, you will need to amend the business license — a process that takes several weeks. Draft the scope comprehensively from the start.

Skipping the E-Port registration: Some companies complete Customs registration but forget or delay the Electronic Port Card application. Without it, you cannot file electronic customs declarations — meaning you cannot actually clear goods.

Product compliance failures: Importing products without the necessary CCC certification, NMPA registration, or food safety documentation leads to detention at the border, destruction of goods, fines, and potential blacklisting. Verify all compliance requirements before the first shipment.

Transfer pricing documentation: Trading WFOEs that transact with their foreign parent company or related overseas entities must maintain contemporaneous transfer pricing documentation to demonstrate that cross-border pricing is at arm’s length. Chinese tax authorities scrutinize related-party import and export transactions closely.

How Dan Young Business Consultancy Can Help

Dan Young Business Consultancy has helped foreign companies establish trading operations in China for over a decade. Our trading WFOE setup service covers:

• Company incorporation with a properly drafted business scope covering all intended trading activities
• Registered address sourcing in commercial properties suitable for Customs inspection
• Full trade registration package: foreign trade operator filing, Customs registration, Electronic Port Cards, CIQ registration, and SAFE registration
• Bank account opening with major Chinese and international banks
• Product compliance advisory: identifying applicable licensing, certification, and registration requirements for your specific product categories
• VAT and customs duty planning to optimize your import and export cost structure
• Ongoing bookkeeping, tax filing, and customs declaration support

Whether you are a manufacturer looking to import raw materials, a brand seeking to distribute products in China, or a trading company setting up a sourcing office, we provide end-to-end support from registration through full operational readiness. Contact us at [email protected] or call +86 18565453956 to discuss your trading company setup in China.