What is a Representative Office of foreign enterprise in China?
Representative Office represents its foreign parent company in China. A Representative Office is not a separate legal entity from its parent company. It does not possess registered capital or requires injection of any minimum funds.
Many foreign enterprises set up Representative Offices in China as their first step of strategy entry into China.
The permissible activities of Representative Office
A Representative Office can engage in product or service promotion, quality control, market research, business liaisons, and any other activities related to the foreign company's products or services.
But a Representative Office itself cannot directly engage in profit-generating activities. When a Representative Office engages in direct profit-generating activities such as selling products or services, manufacturing products, the local government will demand the Representative Office to set up an enterprise which is allowed to do such business activities in China.
A Representative Office has its own bank account to receive or make payment.
First, the establishment of a Representative Office of Foreign Enterprises shall be approved by Foreign Investment Bureau of China.
And then, the Representative Office shall be registered in the local Industry and Commerce Supervising Bureau.
A foreign enterprise must get approval for setting up its Representative Office in China. The approval procedure differs depending on different industries and business sectors.
After application for setting up a Representative Office has been approved by the government of China, the applicant shall register the Representative Office in the Industry and Commerce Supervising Bureau. The registered information includes the address of the Representative Office, chief representative and representatives, the purpose and business scope of the Representative Office, etc.
Application for Approval of Particular Industries and Business Sectors
For Foreign Enterprises which engage in some particular industries or business sectors such as finance, insurance and securities, etc, specific laws of the particular industries or business sectors will be applied for approving the application of setting up the Representative Office.
When the Representative Office is established, the Representative Office is required to be registered in many other government departments so as that the Representative Office can operate actually. These registrations include:
Employment of local and foreign employees
A Representative Office may hire local as well as foreign personals. The Employment Law shall be observed for hiring and dismissing employees.
As a Representative Office is not a separate legal entity, it cannot open an social security account in Social Security Bureau in China. Therefore, when a Representative Office hires local employees, the Representative Office must enter into contract with a Human Resource agent to provide social security to local employees.
Foreign personnel are required to obtain Work Permission for their working and living in China legally. The registered representatives will be approved for their application of working in China. But for other foreign employees, explanation shall be provided why the local employees cannot fulfill the positions.
Basic documents required for Representative Office registration
To register a Representative Office of Foreign Enterprises in China, the following documents are required to be supplied:
Our legal services for Representative Office of Foreign Enterprises
Shekou Law Firm has accumulated profound experiences and has deep understanding of relevant laws and regulations concerning Representative Office of Foreign Enterprises. Our team of international business lawyers can provide comprehensive legal services regarding establishment and operation of Representative Offices of Foreign Enterprises in China.
For further consultation about establishment and operation of Representative Office in China, please contact our International Business Department.