There are many less companies getting WFOE status than there are Joint Ventures. In a JV, Chinese authorities still negotiate with locals (the Chinese side of the JV) for most of their dealings. A WFOE, by contrast, is truly a foreign corporation wishing to take immediate advantage of China's inexpensive labor. WFOE companies benefit from a large degree of autonomy in China Because they are export-oriented, they can manage their operation with less interference from the different strata of government, acquire land use rights, rent buildings, and directly subscribe to utility services.

This independence comes at a price. It costs approximately $20,000 to set up a WFOE and $50,000 annually to maintain it (legal, tax, accounting). Companies wishing to benefit from the Chinese domestic market should explore creating a Liaison or a Representative Office first.

However, in cases where the local market does not present appeal, or in cases where the foreign company does not wish to share management control with a Chinese company, a WFOE is the entity of choice. Wholly Foreign Owned Enterprises, like Representative Offices and Joint Ventures, are Chinese legal entities and must abide by all laws, including local and federal labor laws. Most WFOE's are required to balance their foreign exchange.