A couple of years ago, we did a post on FICEs, entitled, The China FICE — Foreign Invested Commercial Enterprise. The reason we did that post then (and the reason we are doing this post now) was to clear up common confusions regarding FICEs, which really are nothing more than a subset of Wholly Foreign Owned Entities (WFOEs) and Joint Ventures (JVs). In that post, we sought to explain FICEs as follows:
A FICE is a WFOE that is authorized to engage in wholesale and/or retail trade. The approval requirements for these sorts of entities tend to be stricter than for a manufacturing or service WFOE. Additionally, approval of a FICE usually must come at the provincial level, not the local level. There are some provinces that do not even accept FICE applications. Shanghai and Beijing have the authority to approve the establishment of a FICE, and for that reason, most FICE operations are formed in those two cities.
Foreign Invested Enterprises (FIEs) mostly consist of Wholly Foreign Owned Entities (WFOEs) and Joint Ventures (JVs). All Foreign Invested Enterprises must set out the nature of their business during the licensing phase of the entity registration process. There are all sorts of possible categories, including Regional Headquarters, Service, Purchasing Center, Research and Development Center, Investment/Holding Company, Service Company, Manufacturing Company and Foreign Invested Commercial Enterprise (FICE).
In the end though, a FICE is nothing more or less than a type of WFOE or JV.
With the growth of the Chinese consumer, we are dealing more and more with FICEs and I want to get out there exactly what they are even though I do not like the term FICE because it tends to lead to more confusion than clarity. A FICE is just a type of WFOE or JV that engages in certain types of business in China. So what are those “certain types of business”? The general answer is retail and wholesaling and franchising.
That’s it. Now forget it.