Setting up a Representative Office

All-round Guidance for Chinese Representative Offices
Known as: RO or Rep Office

With huge development opportunities, rapid economic engine and the strategy of one belt and one road, are helping mainland China to attract more oversea enterprises, companies, entrepreneurs to bring their brands, technologies and innovative products to this consumer market.

Through setting up a representative office in mainland China, foreign business entities can sound out marketing response, collect market information, feedbacks from local Chinese customers, and also can establish initial business liaison and distribution channels to build a foundation for the future’s investment.

Requirements and Documents for Setting up a Rep Office

1. Sign register forms for representative offices of foreign ( regional ) enterprises.

2. Choose a physical office and provide leasing agreement, copy of property ownership certificate.

3. Verify notarized and authenticated documents include certificate of registration of foreign enterprise ( registered more than 2 years ), articles of association or organization agreement, power of attorney for authorized signature of foreign entity, appointment document for executive representative, and credibility letter of foreign corporations.

4. CV of executive representative, 3 photos. If executive representative is non resident, you also need to apply for notarized and authenticated passport ( 2 sets ) issued by Chin embassy in your home countries. If executive representative is Chinese citizen, only need original identification card ( ID ).

5. Choose a representative office name with both languages ( Chinese and English ), naming rules such as : Registered Region + Representative Office Name + Chinese Region + Representative Office. For example: USA KFC ( Shanghai ) Representative Office, the end of the name also can be Rep. Office.

6. Business activities, setting up a representative office can not make a list of details business scope and activities, only can be approved as: engaging in non-profit business activities related to enterprises affiliated of foreign countries ( regions ).

Timeline of Registering Rep Office

Whole process completed within 2-3 weeks and you will obtain certificate of registration of foreign resident enterprises and register certificate of executive representative. Certainly, representative offices also can open a local bank account to operate daily running and maintaining such as paying rents, utilities, office supplies, stationery etc, open a bank account needs additional 5 working days.

What a rep. office does:

  • Public relations activities
  • Local business liaison
  • Products exhibitions
  • Market researching
  • Technical exchange
  • Get market feedback
  • Due diligence for suppliers
  • Indirect business activities
  • Recruitment outsourcing

What can not do:

  • Direct business activities
  • Sign contracts, agreements
  • No income records
  • International trading
  • Issuing official invoices
  • Independent HR system
  • Purchase activities
  • Special business permits
  • Actual business scope

Disadvantages of Chinese Representative Office

Cause analysis: Why foreign entities prefer to register limited companies instead of establishing representative office.

View 1 Requirements and Documents

Besides of conventional official forms and application documents, you have to prepare some legal files to verify your oversea corporate certificates if you want to
set up a representative office in mainland China. Include below 5 parts:

1. Certificate of registration of foreign enterprise ( registered more than 2 years ).
2. Articles of association or organization agreement.
3. Power of attorney for authorized signature of foreign entity.
4. Appointment documents for executive representative.
5. Credibility letter of foreign corporations.

And all of them need to obtain notarization and authentication issued from China embassy in oversea branches. If you are reading this guidance, you can find out that more requirement documents need to collect and prepare.

View 2 Choose an Office Address to Register

Unlike WFOE or Joint Venture, Partnerships that these limited company types can use virtual registered address, representative office must rent a physical office as an actual liaison office, this address can not be home address, must be a commercial address then can be approved to obtain certificate of registration.

So why foreign businesses prefer to set up limited companies ( WFOE or Joint Venture and other limited company types ), because have an actual office means more maintaining costs.

View 3 Business Activities

All local registered representative offices only can do market research and feedback from local customers and suppliers, but once your Chinese customers place an order to you, representative office can not sign contracts directly ( this means rep offices can not do sale or products purchasing, you must use oversea entity to operate the orders.

View 4 Independent HR system

Representative offices also can not register social insurance account and house funding system. You have to find a HR agent ( independent third-party platform ) to operate daily personnel recruiting.

View 5 Payments and Invoices

Due to the business activities can not do any actual transactions, so a local registered rep office has to use its foreign entity to operate daily orders to make payments and invoices. In the future, once want using China entities to operate orders ( import, export business ), you have to close the rep office and use a limited company to run the businesses.

FAQs of Chinese Representative Offices

– Why Us. Professional teams providing oversea business entities to set up representative offices in China and offering a series of running and maintaining services.

– Online Registry. Whole procedure completed by electronic online guidance and within 2-3 weeks to obtain the certificates of registration of registration of foreign entities.

– Anytime Changing. Depending on your decision to change the corporate type from rep offices to limited companies ( to do actual transactions ) anytime and wherever you are.

– Tax Compliance. SMEsChina also assists foreign business entities, enterprises to handle with daily accounting and bookkeeping, and annual maintenance services.

Because the unique corporate structure, rep offices can not change to limited liability companies directly, you have to close representative offices first ( known as the procedure of cancellation ) and same time to start the program of company formation, whatever type your limited company is, you may operate simultaneously for procedure of cancellation and process of registration.

You may transfer funding from oversea corporate entity ( foreign parent company ) to the special account of representative office and through the process of foreign exchange to be RMB currency to handle with daily running costs.

Sure, even if no incomes and transactions for a representative office, but you still can open a bank account for you rep office to operate daily maintaining and running costs.

Yes, unlike other corporate types ( LLC, WFOE, Joint Venture, Partnership ) can use a virtual registered address to obtain approval for business registration.

Representative office must rent a commercial physical office as actual address to get approval for registration.

This is a mandatory provision, although no any actual activities and incomes as a local representative office, but also you have to pay taxes depending on your running expenses ( corporate daily costs ), such as personal tax ( local employees ) and other maintaining costs ( monthly rents, traveling allowances, utilities, communication allowances and other running costs ).

You may find out that this view has explained by View3, as a local rep office can not do any actual business activities include selling, purchasing and international trading businesses, so you have to use your foreign entity to operate the daily orders, if you want to do that, you have to change the type of enterprise from RO to WFOE, or find a local partner to set up a joint venture or partnership or other types of limited liability company.

According to Chinese regulations of registration of resident representative offices of foreign ( regional ) enterprises, one executive representative can be appointed by foreign business entity, and also you may appoint other representatives to be the general positions, known as general representative(s) with no restrictions on the numbers. But executive representative only 1 person can be appointed.

Limited companies can obtain certificates of business registration easily and quickly, only needs 20 workdays to get approval. Also limited companies can apply for import and export permits to get approval of international transactions. Learn more: Incorporating a LLP Establish Subsidiary Company China Company Formation LLC

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