How to Establish a Representative Office

Having a physical presence in China can be part of a long-term strategy to enter the Chinese market and it can generally be done within just a couple of months. To register and set up an RO a company must register with the Chinese Administration of Industry and Commerce, a process which usually takes about three months. In general, the application and registration process takes two weeks and the whole RO set-up normally takes about two months. Although the process can be easier if you already have an existing company established in your home country, newly incorporated companies can also be used to register an RO, in which case you must provide a bank reference for application purposes at the local bureaus.

All foreign companies applying to establish an RO must comply with the following stipulated criteria:

Be legally registered in their home country.

Enjoy a “good business reputation.”

Provide reliable and authentic documents as required by the relevant laws and regulations.

Be in charge of the relevant establishment procedures according to the relevant laws and regulations.

Moreover, depending on which industry and business category your company falls into, the relevant government approval bodies may insist that the applicant has been in business for a specified period of time which is usually one year and may also ask them to provide evidence of past business dealings between the applicant and China. Generally these requirements are flexible and can be met by the company after careful preparation.

Key Features

An RO has no legal standing, meaning that it does not possess the capacity for civil rights and conduct, cannot assume civil liability independently of the parent company, and is fairly limited in its hiring ability. No more than four foreign employees can be hired while local staff can only be hired through government HR agencies.

To establish an RO the steps below need to be followed:

You will need to:

1. Acquire preliminary approval from the relevant government authority. Since the circular issued in 2004 by the State Council, foreign companies engaging in consulting, trade, investing, manufacturing, advertising, and goods transportation and leasing do not need to be approved by MOFCOM. After the elimination of the preliminary approval requirement, the procedure has been significantly simplified. However, approval from other authorities is still required for ROs of foreign companies operating within specific industries. For instance, foreign financial institutions and banking enterprises are overseen by the China Banking Regulatory Commission.

2. Register with the Administration of Industry and Commerce to receive the Registration Certificate for Representative Office of Foreign Enterprises (Hong Kong, Macao, and Taiwan).

3. Apply for official and carving chops (Financial and RO chop) and register with the Public Security Bureau.

4. Apply at the Bureau of Quality and Technology Supervision for the Enterprise Code.

5. Apply for local tax registration.

6. Apply for state tax registration.

7. Apply for approval at the People’s Bank of China to open a foreign exchange bank account.

8. Open bank accounts (foreign exchange current account and basic RMB account).

9. Enter into employment contract with the designated departments under the labor bureau or with Foreign Enterprise Service Company Organization (FESCO) or other licensed HR agencies.

There is no need to have an accredited local agent—Shanghai being an exception—to be in charge of the application process. Anybody can submit the application to the Administration of Industry and Commerce. However, considering the special documents required it is likely that the application will be returned several times making the whole process particularly time consuming. Although it is not a request to do the registration application using a foreign-service unit, I recommend businesses to use an accredited Chinese agent if they want to get a successful RO registration and save time. For the sake of giving you an average service cost, in Beijing the average cost charged for RO registration is RMB 11,200 while in Shanghai it is about RMB 10,000.

Establishing a representative office

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Required Documents

The main documents required to be submitted with the application for the establishment of a foreign party’s RO are listed below. However, approval authorities may require additional documents.

1. An application letter signed and sealed by the general manager or the chairman of the board of directors.

2. Notarized copies of the constitutional and supportive documents sanctioning the legal incorporation and operation of the company provided by the authorities of the jurisdiction where the foreign company was established. These include: Incorporation or Business Registration Certificate of holding company, Annual Report, and Tax Statements.

3. Bank reference letter providing basic information about the applicant (name, legal address, date of opening of the corporate account, registered capital, credit standing, and overall comments made by the bank).

4. Official premises lease or purchase contract together with the landlord, property certificate, and letter of appointment addressed to the chief representative.

5. Identity certificate (ID, passport copy, and visa) of the chief representative.

6. Resume of the chief representative with their signature.

7. Photo of the chief representative.

Post-Setup Registration and Filing Procedure

After a foreign company’s RO application is approved and they have received the company’s Registration Certificate, Chinese law requires the RO, and in some cases its personnel, to carry out a number of administrative registrations and filings. It usually takes 20 working days for the Approval Certificate to be issued, starting from the time of receiving full particulars, instructions, and documents from the applicant. The post-setup registration procedure should take around 40 working days.

The standard post-setup procedures prescribed by the national authorities are set out here.

Public Security Bureau (PSB)

A. Within 10 days of the issuance of the Registration Certificate, the RO is required to file with the local public security bureau. The documents needed for the PSB to issue a Filling and Registration Record are:

The approval letter

The Registration Certificate

Office Chops

The RO is further required to apply for office chops with the competent local PSB and has to provide the following documents:

Application letter signed by the company’s legal representative

Filling and Registration Record

One original and one photocopy of personal identification or passport ID of the individual authorized to apply to make the chop.

The PSB will allow the RO to have the chops made at a designated unit.

TSB—Technical Supervision Vision

The RO has to apply for the enterprise organization code with the local TSB and has to provide the following documents:

Application form

Registration Certificate, one original and one copy

One copy of ID of the chief representative of the RO

Approval Certificate

Office chop

The local TSB will issue a Certificate of Enterprise Organization Code, also known as IC card, providing one original, one copy, and one electronic copy.

State Administration of Foreign Exchange (SAFE)

The RO has to register with the local Administration of Foreign Exchange. The following documents have to be submitted:

Registration form

Registration Certificate

Approval letter

Approval Certificate

Certificate of Enterprise Organization Code

Office chop

The AFE will issue a Foreign Exchange Account License and a Foreign Exchange Registration Certificate.

Local Bank

The RO must open an RMB and a foreign exchange local bank account. The following items are required:

Registration Certificate

Approval letter

Approval Certificate

Certificate of Enterprise Organization Code

Foreign Exchange Account License

Foreign Exchange Registration Certificate

Evidence of Tax Registration

The RO chop, finance chop, and the chief representative’s chop

ID (one original + one copy) of the legal representative

Introduction letter of RO

ID (one original + one copy) of each individual of the company’s finance employees authorized to open corporate accounts

After submission of these documents the bank will issue account books for an RMB account and a foreign exchange account.

Tax Bureau

The RO has to register within 30 days of the issuance of the Registration Certificate with the local tax bureau. The documents that need to be submitted are given below. After submission of these documents the tax bureau will issue a State Tax Registration Certificate and a Local Tax Registration Certificate.

Registration Certificate

Approval letter

Evidence of Bank Account (normally the RO account book)

Certificate of Enterprise Organization Code

ID of the individual filing the application

Procedures with Regard to Foreign Staff

ROs planning to employ foreign nationals are required to comply with the following procedures:

A. Directly obtain the Work Permit from the Local Labor and Social Security Bureau on submission of these documents:

CV of the prospective foreign employee

Employment Proposal

Report on the reason of employing a foreign person for the job

The prospective employee’s qualification for the job

Health status of the prospective employee

Employer’s business Approval Certificate

Five passport photos

Any additional documents required by Chinese laws and regulations

B. Apply for a Working Visa from the Chinese embassy in the foreign employee’s home country.

C. After arrival of the foreign employee in China, he or she must apply to obtain the Working Certificate from the local LSSB on submission of the following documents:

Employment Contract

Work Permit

Passport

Five passport photos

Within 30 days after arrival of the employee in China they shall apply to the local PSB for a Foreign Residence Permit on submission of the Working Certificate.

Overview—RO setup procedure

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