Establishing a Representative Office in China
How to expand your business to China by setting up Representative Office in China

China Representative Office Registration in 2022.

What is a Representative Office in China actually about?

A China Representative Office, also known as Liaison Office, is a commonly used low-cost investment vehicle for mainland China-based businesses. It is designed for businesses willing to develop a China presence. The registration of a representative office takes about 30 working days to be done.

A China Representative Office registration is popularly used by Chinese business investors gain positive returns, mainly through testing the Chinese market as an insider. It was created for those businesses that wish to promote foreign companies throughout China. A Representative Office registration usually takes a month to complete.

Start your China Representative Office in China Today!

China Representative limitations.

A representative office in China merely represents the businesses that exist back home. Therefore, they are not separate from the main branch (which exists outside of China) but merely a ( rep offices) Representative of a China foreign-owned company. 

Moreover, they cannot participate in any activities that cause them to gain returns for the foreign investor. According to Chinese law (China administration of industry and commerce), they can only perform liaison activities.

They are not permitted to sign up legally binding documents or charge any customers and cannot charge a sales service fee. Basically, they cannot conduct direct financial activities, like making money in China or receiving money from Chinese people and businesses.

However, bank branches, insurance firms, accounting, and law companies are allowed to participate in activities that would cause them to gain wealth in China. Representative offices in China are suitable for marketing research, connecting with clients, or global networking.

What is a Representative Office in China actually about?

A Representative Office in China can operate an indirect business such as:

Contracting
Product promotions
Marketing surveys
Technical communications

To setup a Representative Office is of the best entry channels to access and experience the China market.

China market research.

A Representative Office is also known as a liaison office. This means that you will be able to outreach activities in China such as market research, liaising with clients or suppliers, developing a local network, advertising, renting business and personal premises.

 Representative Office Fast Setup.

Establishing a Representative Office in China

A Representative Office – RO, is a less expensive and fast way for foreign businesses to set up in China. Foreign companies specifically use RO for non-direct profit business activities, which usually involve product promotion, research, and engagement.

Representative Office, excellent for product promotion.

If your final objective is to outreach activities in China, a representative office is considered a good solution. Rep office is a specific company type – for businesses who requires a presence in China, yet not connected to trading.

Analysing the market.

A Reprepresentative Office opens up a vast opportunity to step up your business and gain further involvement in China. Companies can test the market to ensure any investments or strategies before fully engaging in the Chinese market.

China Representative Office Registration

WFOE vs Joint Venture.

Wholly Foreign-Owned Enterprise – WFOE is a limited liability company in China is privately held, and its shareholders are foreigners that wish to do business in China, no need for a Chinese partner.

A joint venture is a company that starts in China with a minimum of one foreign and one Chinese shareholder as well.

WFOE usually takes about 30 working days to be set up and requires you to specify the scope of your business during the application process.

You need to decide which type of business you require: service, trading, or manufacturing. The process is broken down into pre-registration and post-registration.

China RO vs Joint Venture.

A Chinese Representative office activities in china is the easiest of the three structures to both set up and get off the ground. China RO’s legal entity is subject to being inspected and needs to keep all accounting records, but the application is still straightforward. Once submissions of company documents are made and approved, all that is needed to register the company in China is for it to register with different Chinese government agencies.

The process of setting up a Joint Venture, on the other hand, is complex. One would need to first find a suitable Chinese company to partner with, then discuss the terms of that relationship as to who will be the chief Representative.

Shareholders and the company involved need to agree on essential matters.

WFOE vs China Representative Office.

A China Representative Office, also known as Liaison Office, is a commonly used low-cost investment vehicle for mainland China-based businesses. It is designed for businesses willing to develop a China presence. The registration of a representative office takes about 30 working days to be done.

A China Representative Office registration is popularly used by Chinese business investors gain positive returns, mainly through testing the Chinese market as an insider. It was created for those businesses that wish to promote foreign companies throughout China. A Representative Office registration usually takes a month to complete.

What you need to know about setting up a Representative Office in China.

With an RO being one of the most common options for foreign Businesses in China, it opens up a vast opportunity to set up your business and gains further involvement in the Chinese market. With the help of an RO, companies can test the market to make sure of any investments or strategies before they decide to fully engage in the Chinese market.

Setup cost of a Representative Office.

Setting up a WFOE used to require a total capital of RMB 100,000. However, this changed in 2014, and now there is no minimum amount. Setting up a representative office in China was affordable but since 2010 they have gotten a bit expensive.

There is a financial burden on the representative office in China, and the tax burden has also increased from 9.5% to 11.69%. JV setup costs are subject to the type of JV set up: Equity Joint Ventures and Cooperative Joint Ventures. The minimum amount of capital needed is RMB 30 000 for each investor, yet, this depends on the shareholders.

Deciding on company structure.

The decision of which structure you want to expand your business is essential. Each offers its own benefits, and the final decision is up to you, depending on your goals as a business entity. A China RO is a perfect solution for businesses that want to try the Chinese market for the first time. It allows businesses to develop relationships and create their presence in China, as well as understand how business is done there.

WFOE is very different because it allows companies to establish a more authentic presence to trade and conduct business for profit. They also benefit from a lower tax rate and gain complete control of the operation.

Finally, a JV is a good choice for those businesses that already have existing relationships with companies in China and are suitable in cases where WFOE is not an option due to governmental regulations. You may decide which structure you wish to go with, but you should do further research.

The advantages of having a Representative Office in China.

Quick to set up a new rep office and obtain the registration certificate.
The registered capital is not a requirement for the foreign investor.
Less tax than other types of business setups (no corporate or divided taxes).
Less expensive solution and easy to use.
Easy to meet up with contacts and factories in China, saving time.
Able to have your own physical presence and office in China.
Can hire foreign and local staff.
Manage product and supply chain from within China.
Quality of product check.
Keep marketing strategies updated.

The disadvantages of having a Representative Office.

The restrictions of all activities which involves profit (i.e., an RO cannot sell or make money).
Can only deliver services to its main offices.
An RO may not take part in any contracts with customers involved in China.
May not trade or do business with external entities.
The RO cannot employ staff directly and must make use of an authorized agency.
You must rent an office space for your RO _before _starting the setup process.

Representative Office Registration.

When setting up a China Rep Office in China, there are numerous things to consider, and hence it is essential to seek appropriate legal help. Corporation China has developed unparalleled expertise in this area and can provide you with everything necessary to set up your representative office. Corporation China offers first-class solutions to all of the following requirements.

Registered company location.

Prospective clients and business partners will often ask you where your company is located in China. Hence, a good location is an asset. At Corporation China, we offer excellent solutions for this through our Virtual Office System China Presence™ or our China Virtual Entity™ system.

Registered company bank account.

Due to existing restrictions on international money transfers in China, your mainland-based clients will only be able to pay you within China. Therefore, a bank account in which local companies can transfer you Chinese RMBs is necessary.

China Representative Office registration.

The required documentation is basically the notarized copy of the Patent companies’ Business license and passports. Depending on an individual or a company formulating the company, specific documentation is required. See list below for the required documentation for an individual or company initiating the company to be incorporated.

Setup as an individual.

A scan of your passport.
A Personal Bank Reference Letter.
Choose a name for the your China WFOE.
Choose a location for the company in China.
Easy to meet up with contacts and factories in China, saving time.
Able to have your own physical presence and office in China.

Setup as a company.

A Passport Scan of the Director(s).
A Certificate of Company incorporation.
A Company Bank Reference Letter – stating no bad record.
All Documents need to be notarized by the Chinese Embassy.

Setup as a Hong Kong company.

Notarized copy of Passport of Director and Company Registration Certificate.
Hong Kong Company Registration Certificate.
Hong Kong Company Bank Reference Letter.
The Hong Kong Company will then be the Holding Company for the China Representative Office. We can set up a Hong Kong Company in about 5 days.
The RO cannot employ staff directly and must make use of an authorized agency.
You must rent an office space for your RO _before _starting the setup process.