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Introduce of registration a representative office (RO)

There are 4 modes of business presences in China: Representative Office, WFOE, Joint Venture, Hong Kong company. About 20% of PTC's clients chose RO as their China business entity since it's cost efficient and it requires no capital investment, for a roughly comparison between these 4 modes, check the Comparison Chart.

:According to State Administration of Industry and Commerce's file: Gong Shang Wai Qi [2010] No.4, PARENT COMPANY must be established for more than 2 years

Representative Office (RO) is established by foreign companies to engage in business liaisons, quality control, product promotion, market research, exchange of technology and other permitted activities in China.

ROs are not allowed to directly engage in operational activities, RO can't issue official invoices, nor receiving payments from it's clients. State Administration of Industry and Commerce (SAIC) usually specifies in scope of business, as it shown in the Registration Certificate of ROs, that ROs can not engage in direct operational activities. Therefore, it's not a form of foreign direct investment (FDI) in China. However, some ROs are engaged in operations in a lawful or tacitly permitted way and constitute one of the direct foreign Investment forms in China, for instance: ROs of foreign law firms, ROs of foreign airlines etc.


A Representative Office in China may only engage in non-profit making activities, it can carry out the following functions:

Conduct research and survey for its parent enterprise in the local market;
Liaise with local and foreign contacts in China on behalf of the parent enterprise;
Conduct research and provide data and promotional materials to potential clients or trading partners;
Act as a coordinator for the parent enterprise's activities in China;
Make travel arrangements for parent enterprise representatives and potential Chinese clients;
Under no circumstances may a Representative Office do the following in China:

Directly engaged in any business for profit;
Sign contracts or deals on behalf of the parent enterprise;
Represent any firm other than its parent enterprise;
Collect money or issue invoice within China for services or products;
Buy property or import production equipment.


Features of a Representative Office

1.1. Legal Status of a Representative Office


The Representative Office is a non-legal entity operating representing it's parent company overseas. A representative office is not allowed to engage itself in business activities, issue invoices on its own, remitting outward, signing sales or purchase contracts, or receiving income from services performed but may act as a liaison and promotion office for its parent company.

1.2. Name

The name of the Representative office should be in the form of "Name of the Enterprise + Name of the City + Representative Office".

1.3. Business Address

At the beginning of setting up the Representative Office, it is advised to decide the place and building where office is going to be located first, as the address of the proposed office will have to be mentioned in the application for approval.

Note: the business address must be located in commercial buildings approved by the government, in Shanghai, the Rep. office's location MUST be in a Grade A office building.


Features of a Representative Office

Activities Description
Legal status and Business scope The Representative Office has no qualification of a legal entity, is not allowed to directly engage in operational activities, as shown in the Business License of ROs, that a RO should not engage in direct operational activities, such issue invoices on its own, remitting outward, signing sales or purchase contracts, or receiving income from services performed but may act as business liaison, product promotion, market research, exchange of technology for its parent company.
Name The name of the Representative office should be in the form of "Name of the Enterprise + Name of the City + Representative Office (or Office)".
Min-registered capital No requirement on the capital for the establishment of a RO
Financial services The RO may open account in bank and accept the payment from the parent companies overseas. However, the remittance can only be used for the day-to-day expenses. They are not allowed to open L/C account in bank and to accept other more extensive financial services
Business Address The business address must be located in commercial buildings approved by the government.[CNBS ]
Hire staff Cannot employ the staff directly, which must be processed through a third-party intermediate agencies with relevant qualifications.

Documents required for application
Below are the documentation of Foreign Representative Office setting up in China, Item 1-5 should be prepared before bring to China:
(1)1x Certificate of Incorporations or Equivalent document certified by Chinese embassy or Chinese consulate overseas.
(2)1x Bank Reference Letter from investor's bank to declare a good standing.
(3)A brief summary of the operations and business of the parent company, such as the principal business activities, registered address, contact phone number, fax, name of the parent company; director of parent company's passport copy
(4)China Chief Representative: Resume; 6 photos [2 inch size] ; passport copy.
(5)If there are Representatives to be stationed in China in addition to the Chief Representative, the resume, 2 pictures, passport copy;
(6)2x original leasing contracts of the office premise to be used by the Representative Office; the lease term should be at least 12 months; the lease contract should be register in building administer department.

Registration and Post-registration Procedures

(1) Pre-registration
Before commencement of registration procedures stated in Section B and C stated below, all the documents and information listed above must be ready.
(2) Registration Procedure
The first step is to apply for registration with the Administration for Industry and Commerce in Shenzhen (or Guangzhou, Dongguan, Zhuhai. Once the application is approval and Business Registration License issued the post-registration procedures as listed in Section C then need to be performed.
(3) Post establishment Registration Procedures

Upon the issuance of the Registration Certificate, we will then perform the post-establishment registration procedures, including:

Apply for the Representative Office 's Registration Certificate with State Administration of Industry and Commerce (SAIC)
Chops made by Public Security Bureau (PSB)
Apply Organization Code License by Technical Supervision Bureau (TSB)
Register in Local Taxes Bureau
Arrange the bank account certificate
Open Foreign Currency and RMB bank account
Consign process
(1)Sign up a consign contact, with 50% deposit
(2)Provide the required documents
(3)Prepare the application document for client to confirm and sign.
(4)Proceeding the application & registration
(5)30 working days, accomplish

 

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