To form a WFOE in China, one typically must first have in place a valid lease, which is sometimes easier said than done. We are always getting asked by our clients how it is that their WFOE can have a valid lease when it does not even exist yet. Here is a copy of an email from one of our China lawyers to a WFOE formation client that explains exactly that:
This is a set of standard lease documents for leasing to a Chinese entity or an existing WFOE. The lease document makes no provision whatsoever for dealing with the situation of lease to an entity is preparation for formation of a WFOE. In fact, the lease document requires you to provide a business license prior to execution of the lease. Obviously, you cannot do that since your WFOE does not exist.
You should contact the landlord (or we can do so if you wish) to ensure that the landlord understands your exact situation. If the landlord understands and agrees that it understands and will cooperate, then we can add the language necessary for your lease to be acceptable for WFOE formation purposes. The landlord should be aware that the lease will initially be in the name of the WFOE shareholder and then will be transferred to the WFOE upon successful formation of the WFOE. The landlord must agree to that transfer in advance and it also must agree to cooperate fully in the WFOE formation process. In addition, the landlord must warrant that the premises can be approved for the use to which you intend to make of the premises and that the lease will be registered with the applicable government real estate administration in Shanghai. Of course, this means that the landlord will make all tax payments and will provide tax receipts to the tenant. Note that the lease cannot be entered into until you know the identity of the shareholder of the WFOE.
Generally, if you satisfy all of the requirements mentioned in the above email, you will be fine for the lease requirements of a WFOE.