China Company Formation

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Representative Office

The simplest and most cost effective method of establishing a useful business presence in China is the Rep Office. The choice for an initial Rep office will normally be determined by basic market and product research in China. The high profile cities of Shanghai, Beijing, Guangzhou, and Shenzhen are the most likely choices for the Rep office. It should be noted that more than one Rep office can be established in China by a foreign entity. The cost to establish a Rep Office will depend on the City and province of registration

A Rep. Office is an entity involved in business activities which do not result in direct profits being made by the office. They are not allowed to operate as partnerships or sole proprietorships in China as they are not recognized as legal persons. However, they are allowed and encouraged to conduct "indirect operational activities" such as liaison for business purposes, introduction of products, market research and technology exchange. These activities should be preparatory and supplementary activities, market research on the local market, providing business information and supplying sales for the headquarters.

In March 2010, the State Administration of Industry and Commerce (SAIC) released new regulations regarding the registration of Representative Offices in China. The changes include the following :

  • An Overseas company must be at least 2 years old before they qualify to establish representative office in China.
  •  The validity of Rep. Offices has now been reduced from 3 years to 1 year. Current Rep. Office licenses will be honored; however, license renewals will only be for 1 year subsequently.
  • Notarized and attested incorporation documents will be required for every Rep. Office renewal.
  • The Bank Statement of Credibility of the overseas parent company will also need to be notarized and attested along with its incorporation documents.
  • Newly formed Rep. Offices will be limited to only 4 foreign representatives including the Chief Representative. Current Rep. Offices with more than 4 representatives will not be allowed to add additional representatives but will not be required to decrease their numbers. The number of local employees hired through dispatching services to work at a Rep. Office appears to not be affected.

We believe this is a means for the Chinese government to create additional barriers for the establishment of Representative Offices in China in order to dilute their appeal.