Representative Office Registration

Hongda’s takes care of everything of forming your overseas headquarter's representative office in China. No need to stress!

What Is A Representative Office In China?

A China representative office is the local presence of a foreign company in China. It is not legally allowed to make profits, issue invoices, and trade, which are the main purposes of WFOE or Joint Venture. However, a representative office is still an ideal opinion for a foreign headquarters to organize business meetings, perform quality controls, promote products or services, and conduct market research in China.

A Representative Office (RO), due to its special legal status, functions solely as a cost center within a multinational group. This makes it a relatively simple structure in terms of overall group investment decisions and organizational design.

For certain specialized industries, establishing a representative office requires approval from the relevant regulatory authorities. Nevertheless, even with such sector-specific requirements, the process can still be completed efficiently.

For example, non-profit organizations and airlines engaged in cross-border operations are generally limited to registering as representative offices. In these cases, the RO structure is often not only the simplest option but, in fact, the only legally permissible one.

Pros and Cons of a Representative Office

Forming a representative office in China for your foreign country may become an ideal choice if the transactions are built with the foreign headquarters directly. You can assign one of the representatives in China to organize meetings, explore markets, display products, and conduct liaison activities on behalf of the foreign company at any time while enhancing your customers’ confidence in your professionalism as they visit your physical office.

Furthermore, a rep office will also offer:

A real presence in China by locating your office;
Enhanced brand-building capabilities as the market changes;
Detailed local market research and exploration;
Organized and land activities of foreign headquarters in China;
A corporate bank account to receive operation fundings from overseas companies;
Employ foreign representatives directly or local staffs from third-party agencies;
No registered capital requirement.

However, a representative office is merely the representation of a foreign company in China. As a consequence, it is not allowed to:

A representative office is merely the representation of a foreign company in China. As a consequence, it is not allowed to:
Conduct any business activities for profits;
Sign business contracts for the overseas company;
Represent any companies other than home headquarter;
Purchase any property or asset in China;
Import or export goods;
Receive service payments and issue invoices to local customers;
Store any products in China;

If your operation involves any activities mentioned above, a rep office will not be appropriate. Opening a WFOE or joint venture is a better choice for you to carry your business instead.

Read more about the pros and cons of registering a representative office in China here from our previous blog.

How to register a Representative Office in China

1. Basic Requirement

To establish a Representative Office (RO) in China, your overseas company must first meet certain prerequisites, including:

Entity qualification and duration of existence: The applicant must be a legally existing foreign enterprise with at least two years of continuous operation, and must be able to provide proof of registered address and a valid business license.
Scope of activities: A Representative Office is not permitted to engage in profit-making activities. Its functions are limited to business-related activities such as market research, promotion and publicity, and liaison.
Documentation and creditworthiness: A financial credit certificate issued by a bank with which the company has business dealings, and proof of lawful use of the office premises in China is required.
Industry-specific pre-approval or post-registration filing: Depending on the industry, some foreign enterprises must obtain pre-approval from the relevant authority before proceeding with registration, while others may be required to complete government filing procedures promptly after registration in order to operate normally.
Number of representatives: A Representative Office may appoint no more than four representatives in total (including the chief representative).

2. Establishment Procedure of a Representative Office

Step 1: Confirm application intent and eligibility

As mentioned above by Hongda, a Representative Office in China may only engage in non-profit activities such as market research, promotion and publicity, and liaison. If you intend to carry out profit-making business operations in China, then a Representative Office is not a suitable choice — instead, you should consider establishing a WFOE.

If you are certain that a Representative Office is the most appropriate entity type for your business, you must also confirm whether your industry is subject to prior approval or post-registration filing and make the necessary preparations.

Step 2: Apply for prior approval (for regulated industries)

For specialized industries, a representative office must first obtain approval from the relevant regulatory authority before proceeding with registration at the Administration for Market Regulation. For example, an airline’s representative office can only be established after receiving approval from the Civil Aviation Administration.

1. Banking industry (foreign bank representative offices)

Authority: National Financial Regulatory Administration (NFRA) and its local branches

2. Insurance industry (foreign insurance institution representative offices / general representative offices)

Authority: National Financial Regulatory Administration (NFRA)

3. Securities institutions (investment banks, securities firms, fund management companies, etc.) representative offices

Authority: China Securities Regulatory Commission (CSRC) and its local offices

4. Air transport industry (foreign airlines representative offices / foreign airline offices in China)

Authority: Civil Aviation Administration of China (CAAC)

5. Legal services industry (foreign law firms’ representative offices)

Authority: Ministry of Justice

6. Press and publishing institutions (foreign press and publishing organizations establishing offices in China)

Authority: National Press and Publication Administration (NPPA), jointly with the State Council Information Office

7. Copyright organizations (foreign and international copyright organizations’ representative offices)

Authority: NPPA (National Copyright Administration)

8. Broadcasting and television institutions (foreign broadcasting organizations’ offices in China)

Authority: National Radio and Television Administration (NRTA)

Step 3: Registration with AMR (Administration for Market Regulation)

After obtaining the pre-approval (if applicable), you must apply for registration with the AMR within 90 days. The AMR will make a decision on whether to approve the registration within 15 days of acceptance.

Step 4: Post-registration filing (for certain regulated industries)

For example, representative offices of foreign securities or futures exchanges must, within 5 business days after completing AMR registration, file with the local CSRC office.

Step 5: Bank account opening

The Representative Office must open a basic deposit account with a bank in China to handle operational funds and staff salaries.

Step 6: Tax registration / tax information confirmation

The Representative Office must register with the local tax bureau and activate a tax payment account. Although an RO does not conduct profit-making activities, it is still required to maintain proper accounting records, file annual reports, and fulfill ongoing tax reporting obligations.

You may choose Hongda’s Bookkeeping Services for professional assistance.

Hongda’s China Representative Office Setup Package

No need to put yourself into the complexity and trouble of forming a representative office. Let Hongda’s golden experts do it for you to save your time so that there is nothing to worry about. Just relax until everything is perfectly and effectively done.

Alongside the formation services of your representative office, we also recommend the following services be included in your package to help you through the hard start-up phase:

Assistance in labor contract signing with local staffs and registered social insurance;
Bookkeeping and accounting services, including journal entries, profit and loss statements, balance sheets, cash flow statements, cash reconciliation, individual income tax declarations, annual auditing reports, and license renewal;

Hongda is always happy to provide any in-house legal, financial, and human resource services, an optimal way to keep your rep. office compliant at any time during your operation.

Considering opening your representative office in China? Simply hit the button below for a free consultation with Hongda to discuss your plan today.

What is the legal status of a representative office in China?

The representative office of a foreign enterprise is an unincorporated entity engaged in liaison in China on behalf of a foreign head office. A representative office cannot engage in business activities, issue invoices, sign sales or purchase contracts, or receive income from services provided. However, it can act as a joint finalist and promoter of the head office.

How can I name a representative office in China?

Normally the naming structure of a representative office in China is:

Country name of the head company registered + Name of the company + City name + Representative Office.

Who can be appointed as the chief representative of the representative office?

The chief representative is the legal representative of the Chinese representative office appointed by the foreign head office. There is no restriction on the nationality of the chief representative, who does not have to stay in China during operation.

Does the representative office have to pay taxes in China?

Yes. Whether a representative office needs to pay taxes, and what taxes should be paid, depends on the nature of the industry of the foreign head office.

Representative offices of foreign government agencies, non-profit organizations, and certain international organizations (such as the United Nations) are not required to pay taxes, but they need to obtain approval from the Chinese tax bureau.
Representative offices of foreign law firms, accounting firms, and auditing firms shall pay corporate income tax, value-added tax, and personal income tax based on the contractual income generated by the representative office through the head office to provide consulting services in China.
Representative offices of foreign companies engaged in trade, advertising, tourism, etc. are also required to pay corporate income tax, value-added tax, and withholding personal income tax depending on the operating expenses of the representative office.

How can the representative office hire local employees in China?

The representative office shall entrust a local foreign affairs service agency designated by the Chinese government to employ Chinese employees in accordance with Chinese laws and regulations. Usually, a representative office signs a service contract with a local foreign service agency. According to the service contract, the local foreign affairs service agency agrees to provide services, and the representative office pays for the service fees for hiring Chinese employees. After establishing an employment relationship, the local foreign affairs service agency will pay social insurance on a monthly basis.

Can the representative office open a bank account in one of the Chinese banks?

Yes. Representative offices can open foreign currency accounts and RMB accounts. The foreign currency account is used to receive the appropriation from the foreign headquarters, and the RMB account is used to pay daily expenses. In actual practice, most representative offices only open RMB accounts, which can not only receive funds from foreign head offices but also pay for daily operating costs. Representative office bank accounts cannot accept funds from any other source.

What should be included in the credit report issued by the bank?

The following should be included in the credit report:

The time when the company opened an account in the bank, and indicate the evaluation words such as good operation, normal business, no bad records, etc., and the amount of deposits, etc.

If the bank credit certificate is in a foreign language, a translation must be submitted and stamped by the translation company.

Sound United is the leading designer and manufacturer of consumer audio products in the US. Sound United has been using Hongda since 2013. Moving one’s operation to China is not a small task. But Hongda’s expert services helped us set up a company and deal with tax issues so we could get on with growing our business in no time at all, and that’s why we continue to use them today.

Jack Peng

Vice President | Sound United Asia Pacific