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