For more than 30 years, starting from 1979, China has been experiencing rapid economic growth, with its GDP growing at an average rate of 10%. This growth has amazed the entire globe, and the good thing about it is that the country’s administration has now opened the economy to foreigners. This makes it a great place to target when focusing on growing your firm.
There are a number of company formations that you can pick to serve as your vehicle in China, including wholly foreign-owned enterprises (WFOE), joint ventures (JV), and representative office (RO). Although WFOEs are the most preferred vehicles, other formations also have their unique benefits. In this post, we will take a closer look at the registration of a representative office China.
Special Benefits of Company Registration in China
Every investor out there is headed to China, and it is easy to see why: the support that the jurisdiction offers enterprises to spur growth. In its quest for faster and bigger growth, the country’s administration has embarked on an ambitious plan of supporting businesses through lower taxes, incubation programs, and reforms. Other benefits of opening a representative office in China include:
- China is the largest market in Asia.
- The country’s economy is growing rapidly.
- A lot of incentives for both imports and exports.
- Easy availability of raw materials.
- Highly developed infrastructure.
- Educated workforce.
- Many free-trade areas.
- Easy access to the neighboring markets.
How to Register a Representative Office China
How Does a Representative Office Work?
A representative office (RO) is a form of business, which is considered an extension of your parent company back home. Therefore, any agreement signed by an RO is considered part of the home company. According to the Chinese company laws, representative offices are not allowed to engage in profit-making deals. However, you can use it on a number of activities, such as:
- Liaison activities for the parent company.
- Market research, publicity, and display of products by the parent company.
- Scouting for potential partners.
Note that China is very strict when it comes to business rules of operations.
For example, if your RO violates the rules of operations, such as engaging in profit-making activities, it might attract a hefty fine and the stated income confiscated by the state.
Indeed, an RO is not allowed to hire staff directly because it is not a capitalized firm. Despite all of these restrictions, ROs are very attractive for companies looking forward to procuring products from China. See, the RO looks for the best brands and leaves the details to the parent company to handle everything from there. It is an excellent idea when targeting limited presence in China.
How to Register an RO in China
Now that you know having an RO is an excellent idea, let’s look at its registration. Here are the main documents that should be prepared and submitted to the State Administration for Market Regulation (SAMR).
- Feasibility study report and facility premises certificate.
- A duly filled application form for ROs from SAMR.
- Registration form for personnel from SAMR.
- Application letter for the establishment of an RO.
- Parent company’s certificate of incorporation.
- Bank statements of the parent company.
- Details of the chief representative officer.
- Details of foreigners (passports or ID cards) of foreign employees who will work in the company.
As you can see, there are so many requirements for you to register a representative office (RO) in China.
To make it easier to register an RO, you should work with an agency of experts.
These professionals can help you to navigate through the complex registration landscape. The experts will also come in handy to help you comply with different legislations.