How to set up a representative office

   According to the law of china, a representative office in China for liaison with Chinese businesses and customers on behalf of its parent company is not considered to be a separate legal entity. It must be emphasized that a representative office may not carry out direct revenue earning business activities. For example, it cannot enter into purchase/sales contracts and cannot receive payment for services, issue invoices nor repatriate moneys overseas. However, it can open bank accounts and employ staff to maintain liaison with customers and suppliers. Its head office can also enter into contracts with its supplier/customers in China in its own name, but not in the name of this office. Therefore, before a foreign investor establishes its presence in China using foreign investment enterprises (FIEs) such as equity joint venture, cooperative joint venture or a wholly foreign- owned enterprise, it could first set up a representative office to test the Chinese market.
   Advantage:
   The simplicity and short time required for establishing a representative office is the main reason for its popularity in the China market. Unlike foreign investment enterprises, representative offices are not required to meet stringent requirements for items such as Pre-approval and capital size. The strong points to establish a representative office are as follows:
——Can handle market research, sourcing, project investigation for mother company, who in turn to execute trading function.
——Can hire local staff to work from labour market..
   Disadvantage:
   Since representative office is not considered to be a separate legal entity, it only works as liaison purpose, the restrictions are:
—Limitation in activity. No trading or invoicing is allowed.
—Local staff should be hired via government admitted agents.
—Although not profits, cost expenses still attract tax liability
   Details for establishment:
   Normally, to establish a representative office will take about 10-30 dyas, once all the necessary documents for application are ready for submission.
   The documents required are :
    A.Investors' business licenses & certificates of incorporation;
    B.Bank reference letter for the foreign investors, issued within 6 months & in both English and Chinese language and certified by the Chinese Embassy or Consulate in your country.
    C.Copies of passport and China entry permit of all the legal representatives and 4 photos of the chief representative; Appointment letters and resume of the chief representative
   D.Copies of lease agreement and title deed sealed by Housing Authorities.
E.Certified true copied of incorporation of applicant’s company certified by the Chinese Embassy or Consulate or rotary agency in your country.
F.Minutes of Board Meeting to authorize Chief Representative ,Minutes of Board Meeting to setup representative office
    G.Last annual return to Company Registry and to Tax Department
   H.Other documents may be needed and we will provide you a list of it once entrust it to us.
    Charge and payment terms:
—Government Fee: RMB8,500
—Other fee may charged by the government: RMB3,500
—Lawyer’s Charge: RMB5,000
The detailed terms and articles will be find and decided in the final contract between you and us.