Representative Office Registration

Business Formulation

What is a Representative Office?

The most common solution for a foreign enterprise to have an extended arm for oversea business in China, the Representative Office (RO) is the simplest and easiest way.
RO, also well-known as Liaison Office, can be considerd as a separate entity that represents as subordinated to a foreign parent company in China. RO can be considerd as lightest investment structure, and normally this approach is utilized when the foreign company would like to do marketing surveys, quality control, product promotions, technical exchange services or conduct certain operational activities to support as entry way to expand business in China.

Pros and Cons of a Representative Office

Before moving forward with the incorporation process, it is vital to execute a due diligence on the intended JV partner.
Apart from choosing the right partner, there are several pre-considerations needed to be taken into account:

Comparison between Representative Office
and WFOE

In general, the setup procedure and forming structure of a Representative Office (RO) is relatively simple and faster than a WFOE. Usually a RO is recommended for a foreign company that is not 100% sure regarding their strategy on penetrating business in China. RO can be considerd as a more conservative approach as the beginning step to setup business in China.

Considering a long term strategy, ROs are unable to be directly converted to aWFOE structure and it is necessary to do a deregistration of the RO and a new application for a WFOE. Thus, it is very important at the beginning stage to determine the right company structure. The table below giving a general concept about the comparison of a RO and WFOE taxation structure:

Setting up a Representative Office (RO)

Before setting up a Representative Office (RO) in China, it is a basic requirement that the overseas parent company must be incorporated and the entity must have been running in operations supported by active transaction for more than two years.  Private individuals and partnership are not allowed to form a RO in China and the pre-requisition of the parent company is to be a limited liability company or a corporation.

The RO registration is a quick process that can be completed within 7 working days.