In the past, foreign investors in some industries that were not High Technology or export oriented needed to find a Chinese partner and establish a joint venture instead of a Wholly Foreign Owned Enterprise, or WFOE. This set limits to establishing WFOEs in the service sector. In theory, WFOE enterprises in the service sector could not be established, since they did not manufacture goods that could be exported and typically did not use advanced technology. Having said that, exceptions certainly did exist in the past, but now the possibility of setting up a WFOE will definitely be open to more businesses in the service sector.
To give you an example, one specific type of business that will now be able to set up WFOEs are consulting companies. In a conference sponsored by the Beijing Foreign Investment Service Center in which Lehman, Lee & Xu participated, Dr. Chen Gang, Deputy Director of the Beijing Ministry of Foreign Trade and Economic Cooperation announced that, under the new policy, foreign consulting companies are now allowed to set up WFOEs in Beijing.
