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Establish Representative Office (RO) in China

China RO Registration Service
Hotline: 86-755-82143348,

A representative office basically is to serve as a liaison office between a foreign company and its business partners in China, and to coordinate the parent enterprise activities in China (travel arrangements, promotion etc.).When investors have plans on establishing representative office in China, it is better for them to acquire more information in order to run a successful business in China.

Establish Representative Office (RO) in China – Introduction Representative office 
Setting up a representative office is the most inexpensive entry form for foreign enterprises to enter the Chinese market. And about 20% of investing clients have chosen Representative Office as their China business entity since setting up a representative office is cost efficient and it requires no capital investment. A representative office basically is to serve as a liaison office between a foreign company and its business partners in China, and to coordinate the parent enterprise activities in China (travel arrangements, promotion etc.). Representative offices are applicable for many industries: trading, shipping, consulting, etc.

Establishing Representative Office (RO) in China – Advantages of Representative Office (RO) in China
Using a representative office as China entry form has the following advantages:
1. Affordable: no paid capital required, government and service fees are usually lower than what is needed for WFOEs.
2. Quicker registration process (usually within one month or so), and easy to control than others business type in human resources or taxes issues
3. The quickest, relatively inexpensive and easy to set up.

Establishing Representative Office (RO) in China – The Functions of Representative Office:
A Representative Office in China may only engage in non-profit making activities, it can carry out the following functions:
1. It can handle market research, sourcing, project investigation, quality control for parent company, liaison with customers and suppliers
2. It cannot enter into purchase/sales contracts and receive payment for services, issue invoices.
3. A RO can open bank accounts and employ staff for above- mentioned purposes.
4. Apply for work permit and residence permit.
5. A RO is still subject to tax liability, so monthly tax return should be carried out regularly.
6. If a RO is set up in Shanghai, it is qualified to get a car without entrance tax.

Establishing Representative Office (RO) in China – More Tips for China Representative Setup
Tip One: Pick the right entity when you are setting up business in China.
For certain activities and for certain company, a Representative Office (RO) will be the right choice, for other cases this choice might be a waste of time and money, as the purpose of an RO is quite clear but very limited.

Why ? Because you cannot directly change the status of an RO into a WFOE in the future if you want to really get your feet into China and thus you need to register the WFOE separately and close the RO! This implies that you should have a clear plan of what you want to accomplish when setting up a business in China. The set up process, starting from collecting all necessary documents to opening the bank account at the end, will take between eight to twelve weeks. Please consider that all ROs have the same limited business scope, that is: “engage in non-profit activities related to its parent office”.

Tip Two:Analysis your company market and allocate your target customers carefully.
Usually an RO is used as a basis for doing market research within China and other not for profit seeking activities like e.g. meeting and researching / acquiring suppliers and potential customers. It is thus the easiest way to officially step into the Chinese market but also a quite efficient one, if you just want to improve supplier or customer relations quickly. Of course there are some disadvantages coming with it. As you can imagine there are certain activities, which you will not be allowed to do and thus create a trade-off between quick and cheap market entry versus limited commercial activity options. In the following chart you can see the opportunities you will have after setting up an RO but also some limitations of a Representative Office.

Establishing Representative Office (RO) in China –Business Follow Up of China Representative Office Registration
TANNET can provide a series of business follow-up services such as transfer RO to WFOE, monthly bookkeeping and tax return, annual return services, internal auditing, financial planning and tax layout, China policy & market study. Other services include domain name registration, webpage design, website promotion, China trademark registration, Work Permit, Residence Permit, etc. In order to pave a smoother and wider way for your China business success, contact us to get more information.

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