China Representative Office Registration

A Representative Office (RO) in China serves as a non-profit entity established by foreign companies to conduct specific business activities within the country. It acts as a liaison between the foreign company and the Chinese market, allowing for market research, promotion, and limited operational functions.

Whilst a WFOE structure overcomes these limitations and allows more complete business and profit-making in China, it is more time-consuming and expensive to set up and requires much more ongoing efforts to run and maintain. 

A Representative Office is particularly suitable for the following types of business activities:

Early-stage market exploration: Smaller companies with limited budgets and resources can conduct market research, publicity, and marketing activities through an RO.

When considering opening a Representative Office in China, it’s important for companies to carefully evaluate whether this structure is the right fit for their needs. While it may seem appealing due to its lower cost and simplified setup process, the limitations of not being able to generate profit can be significant. Here are a few things to keep in mind:

• Don’t assume that you can easily switch to a WFOE structure later on. Some companies may view opening a Rep Office as a way to get started in China before transitioning to a WFOE down the line. However, it’s important to note that upgrading from a Rep Office to a WFOE requires a complete shutdown and re-registration process, which can be expensive and time-consuming.
• Don’t assume that a Representative Office is necessary for doing business in China. It’s possible to sell products and hire staff in China without opening a Rep Office. Before embarking on the process of setting up a Representative Office, make sure you understand what your specific needs are and whether this structure is the best way to meet them.

For companies engaged in these activities, a Representative Office brings several advantages:

• It has the lowest cost to open and maintain.
• An RO does not need capital input to open. Although a WFOE in theory now requires no minimum capital, in practice capital injection is needed and is hard to extract once made.
• Faster setup time and simpler process than for a WFOE. A Rep Office can normally be set up in several months less than a WFOE.
• A Representative Office can hire both local and foreign employees, with employment and payroll handled by a Chinese agency.

Setting up an office in China can be a complex process, especially for those who are new to the market, so it’s crucial to seek accurate advice.

The good news is that the setup process for a Representative Office is typically faster than for a WFOE, and can usually be completed within 2-3 months.

For full details on the Representative Office setup process and required documents see our Rep Office services guide. The following is a summary of the steps involved:

1. Obtain approval for the company name

As with any company in China, a name needs to be chosen that meets set requirements and is appropriate for the company’s image and brand.  This is then submitted to the local Administration of Industry and Commerce (AIC) for verification and approval.

2. Sign a rental lease for office space

To set up a Representative Office in China, one of the necessary requirements is to provide an appropriate rental agreement. This agreement must meet specific criteria, including being located in the city of registration, having a minimum duration of 12 months, and being for an approved commercial property (not a residential one).

3. Make an application to AIC for registration

The application form and all required documentation is submitted to the local AIC. Provided everything is in order, a business registration certificate usually takes around 2 weeks to be issued.

4. Carve company chops

A Rep Office, like all companies in China, uses a series of chops, or seals, as its official representation. These need to be obtained through the Public Security Bureau (PSB).

5. Enterprise Code

Apply for Organization Code License from Technical Supervision Bureau.

6. Register for tax payment with the local tax bureau

Tax will need to be paid from the date of registration, and tax registration is not handled as part of the main AIC application.

7. Obtain visas for foreign employees

A Representative Office can obtain visas for up to 4 foreign employees.

8. Open a Chinese bank account

Opening a Chinese bank account is an essential step for companies setting up a Representative Office or a WFOE in China. It enables them to carry out local transactions, pay salaries to employees, and receive payments from clients. The process typically involves providing various documents, such as business licenses and registration certificates.