China WFOE ≠ China ICP License

We are in the midst of a new wave of foreign (European and American, mostly) companies coming to our China lawyers when about 80-90% into their WFOE formation process and asking us what to do about getting a China ICP license. These companies are coming to us after realizing that getting a WFOE in China is no guarantee for getting an ICP license in China.

In many of these cases, these companies were lured into forming China WFOEs with an ICP license as the carrot. These companies believed that their forming a China WFOE was their ticket to a China ICP license but then when it came time for actually moving forward on securing the ICP license, they started getting stuck in a morass of vagaries and double-talk and stalling.

They then contact one of my firm’s China tech lawyers, still mostly believing it will be easy for them to get the China ICP license they so much want. Thinking that we will immediately and easily be able to tell them exactly who to contact or what to do.

The following is an amalgamation of a fairly typical email:

We are nearing completion of our China WFOE formation and at the stage of wanting our China ICP license. It now appears that our WFOE formation company does not fully understand China’s ICP licensing process and so can you please tell us what you would charge to get that for us and how long that will take.

Our response is usually something like the following:

I’m sorry, but unless and until we know what exactly it is you will want to do with your ICP license we cannot tell you much at all. I suggest we talk briefly and then we can tell you whether we can help and if we can help, we will give you some fee estimates. Much of the time, having a China WFOE has little connection to getting an ICP license and so we very well may have to essentially start at square one on the ICP issue.

Bottom Line: Don’t pay for forming a China WFOE to get your China ICP license unless and until you are at fairly certain that forming that China WFOE will get you that license. In subsequent posts we will talk more about China ICP licenses. I just wanted to throw this post up now (and fast) to stop others from going down this expensive and often pointless WFOE path.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.