Representative Office in China
A Representative Office (RO) is an office established by a company to conduct marketing and other non-transactional operations.
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.
Advantages of establishing an RO
No registered capital required.
Easy to control than others business type in HR or Tax issue
The quickest, relatively inexpensive and easy to set up.
Disadvantages of establishing an RO
A. An RO is limited in the nature of the business activities in which it can engage, cannot receive any fees for its service or engage in any profit-making activities.
Restricted activities include:
- Rendering services to any persons other than its head office.
- Soliciting, concluding or signing business contracts with any customers or issue invoice in China.
- Warehousing and managing inventor conduct in China for trading purposes.
- Other business trade or activities; whatever direct or conduct on behalf foreign parent company.
- Any activities other than of a liaison nature (e.g. quality control services and installation and testing services).
B. RO cannot employ staff directly. Essentially, an RO must use an authorized human resources agency in hiring its staff.
According to State Administration of Industry and Commerce, before set up an RO in China, PARENT COMPANY must be established for more than 2 years.
Documentation for establishing a Representative office in China
Below is the documentation of foreign Representative Office establishment in China, Item (1)-(7) should be prepared and certified by Chinese embassy before arriving in China:
(1) 1x Certificate of Incorporations or equivalent document certified by Chinese embassy or Chinese consulate overseas.
(2)1x Copy of Articles of Association certified by Chinese embassy or Chinese consulate overseas
(3) 1x Letter of authorization from parent company’s director (with Name and passport number) to authorize someone in China to sign the documents, certified by Chinese embassy or Chinese consulate overseas.
(4) Letter of Authorized Signatory: Parent company’s director (with Name and passport number) is the authorized signatory of that said company. This Letter of Authorized Signatory has to be certified by Chinese embassy/consulate.
(5) 1x Passport copy of proposed China Chief Representative and other Representative(s) certified by Chinese embassy or Chinese consulate overseas.
(6) 1x Appointment letter of China Chief Representative and other Representative(s) certified by Chinese embassy or Chinese consulate overseas.
(7) 1x Bank Reference Letter from investor’s bank to declaring good standing and certified by Chinese embassy or Chinese consulate overseas.
(8) A brief summary of the operations of parent company and the China Representative office.
(9) China Chief Representative documents: resume ; 6 photos [2 inch size] ; passport copy.
(10) If there are Representatives to be stationed in China in addition to the Chief Representative, the resume, 2 pictures and passport copy of Representative(s) are required;
(11) Documents provided by landlord of office in China: 2x original leasing contracts of the office premise to be used by the Representative Office (lease term should be at least 12 months); 2x certificate of real estate ownership, and 2x landlord identification. (we are provide virtual office for registration, please contact us for more info)
Please note that the State Administration of Industry and Commerce (SAIC) announced (January 15, 2010) that the parent company MUST be established for more than 2 years.