1. Foreign Companies Are Leaving China
Foreign companies are tiring of the difficulties and the risks that come from doing business in China. Not surpisingly, our China lawyers have been getting a ton of questions on how to close a China WFOE.
It is difficult and time-consuming to form a WFOE in China. As you might expect, the procedure for shutting down a WFOE is also subject to formal procedures and regulations. You cannot simply abandon your company; PRC law requires a formal de-registration procedure be followed for the shutting down of all companies. The most important part of this de-registration process is a formal liquidation of the company, similar to a Chapter 7 bankruptcy proceeding under U.S. law. Many foreign investors figure they have already suffered enough from Chinese bureaucracy, so they avoid this formal process and simply abandon their WFOE. In taking this course of inaction, they assume