What are requirements and fees of setting up a Representative Office in China?
General Introduction
China Representative Office (RO) is the easiest and most economic way of setting up a legal presence in China without requirement of capital investment. It is an office of a foreign enterprise set up for the purpose of liaising with Chinese businesses and customers on behalf of its parent company. All expenses of a representative office have to be fully funded by the company headquarters.
Key Features
 Parent Company Requirements
Since January 2010 it is a requirement, that the Parent Company of a China Representative Office must be established at least two (2) years old.
 Office Location
In China each Representative Office must have its own office address and the address must be located in commercial buildings/ residency and commercial building approved by the National Security Bureau. 

The original office lease contract and copy of ownership certificate of office are required to report to Government for RO approval. It’s the first step for location approval of RO by the National Security Bureau.
 Name
The name of the Representative office should be in the form of "Name of the Parent Enterprise + Name of the City + Representative Office".
 Business Scope
A China-incorporated Representative Office is not considered to be a separate legal entity and carrying out direct revenue earning business activities in china for a RO is prohibited. For example:
  • It cannot directly engage in any business for profit in China.
  • It cannot sign, purchase, sales or service contracts with any customers in China.
  • It cannot receive payment or issue invoice within China for products or services.
  • It cannot make payments for products or services in China.
  • It cannot buy property or import production equipment.
  • It cannot hire local staff directly without the use of an approved employment service organization in China.

A China-incorporated Representative Office is restricted to conduct only “indirect operational activities”,and non-profit making activities such as:
  • Business liaison
  • Introduction of products
  • Market Research
  • Technology exchanges
  • Quality control
 Registered Capital
There are no capital contribution requirements for a RO Establishing.
 Accounting &Taxes
As Representative Offices are not allowed to generate revenue, their tax base for enterprise income tax (EIT) and business tax (BT) is presumed on the basis of their expenses. The presumed profit rate of 15% is used for calculations. RO can have one part-time or full-time accountant to do monthly tax report. It is therefore recommended to keep a series of bookkeeping accounts based on all the expenses of the RO and all original receipts should be kept in the office for a minimum of five years according to the PRC Law.
 Employment of Staff
A Representative Office must use an employment agency to employ local employees. According to the Labor Law, local employees can only be employed by a legal China-incorporated entity. The registration certificate of the Representative Office must be shown to the employment agency in order to be able to sign the necessary agreements Additionally, according to the Labor Law and Immigration Law foreign representatives of the China incorporated entity can ONLY be officially employed once they have received their work permit. Foreign employees are employed directly by the Representative Office and can sign employment contracts directly without any permission of the employment agency. Maximum 4 foreigners are allowed to apply for work permit from RO in China.
 In Future Job
Every March to June, the additional annual audits and annual inspections are necessary for RO.
Every 3 year, the additional registration extension is necessary for RO.
Process / Time Line Set up/ Costs and Service Charge
New Set up Process Time Line (Working days) Cost of Gov. (RMB)

 

Service Charge of R.S.
Step1 Preparation of required documents           (some of them need to be notarized by the local authority and identified by the Chinese Embassy in your country ) Unfixed Unfixed No
Step 2 Translation of required documents into Chinese 2-3 No RMB 140/1000 words in Chinese (EN to CN)
Step 3 Approval certificate of RO location with National Security Bureau 7 No RMB 7000
Step 4 Registration certificate with State Administration of Industry and Commerce (SAIC) 7 600
Step 5 The chops of RO with public security bureau and chop shop 1 400
Step 6 Enterprise organization code with National Bureau of Quality Inspection 1 148
Step 7 Tax registration certificate with State Tax Bureau and Land Tax Bureau > 1 0
Step 8 Foreign exchange registration (Bank account IC card for foreign currency) with State Administration of foreign Exchange 1 0
Step 9 Bank Account Open with any bank you appointed 3 0
Type Features Time Line (Working days) Cost of Gov. (RMB) Service Charge (R.S.)
Renewal It needs to be finished Every March to June 7 ? 800
Extension It needs to be extended every 3 years before registration date expiry 7 ? 800
Changes -Change chief representative/ Add or change new resident representative -Change address 7 17 0 800 2500
De-register

 

1. Clear tax 
2. Close bank account
3. close account in China Custom
4. De-register with State Administration of Industry and Commerce (SAIC)
5. De-register with National Bureau of Quality Inspection 
6. Cancellation of Company stamps
Unfixed
3
1
7
1
1
Pay off tax
0
0
0
0
0
2500