A foreign company can make use of a representative office structure when entering the Chinese market and carrying out certain operations. Although the permitted business scope of this type of office is limited, opting for this separate legal entity can offer a low-cost and simple solution for operating in China.
INS Global has the experience, local knowledge, and expertise to help you overcome the challenges of creating a representative office in China. We understand the requirements whether you are looking to establish a Shanghai representative office, an office in Beijing or elsewhere.
Why Create a Representative Office in China?
A representative office cannot engage in commercial, profit-making activities. It is generally used to carry out marketing and research. This is with the aim of better understanding the Chinese market and determining the potential of a specific project in this market.
Representative offices allow companies an opportunity to learn more about unfamiliar markets. They may be a great start to making connections or doing research. They might also be a good way to see how the best global talent can be hired through unique local talent pools.
This is in contrast to a branch office, which is a direct extension of the parent company. A branch office can perform core business activities such as engaging in sales or establishing contracts.
Opting for a representative office in the Chinese market offers certain advantages:
- Low setup cost: no minimum capital required;
- Low taxation;
- No invoicing Chinese clients, so no administration costs;
What are the Steps Required for Creating a Representative Office in China
- Rent commercial premises and space.
- Obtain documentation from property’s landlord, including rental agreement and certificate of real estate ownership.
- Register with local administration for industry and commerce.
- Obtain approval for Business Registration License.
- Study the market of another country while also promoting the foreign company.
- Create a contact network, collect information and develop advertising.
- Due to its limited scope, the average duration of a liaison office is two years.
Conditions and Restrictions Applying to Representative Offices
- A Chief Representative responsible for operations must be assigned by the parent company.
- On a monthly or quarterly basis, the representative office is subject to the taxation of 10% on its spending.
- Representation offices can only be located in “Category A” or buildings recognized by thee government.
INS Global accompanies and advises you through the opening of a representative office in China. You can benefit from our knowledge of the economic and cultural environment in which your representative office will evolve.
Let us show you the way through the process of representative office registration to boost your China market entry strategy.
China Market Entry : Representative Offices and Other Vehicles
However, when expanding your operations or services into an increasingly uncertain Chinese market, a Representative Office is only one way to take your first step into this exciting market.
INS Global offers a range of services and solutions designed to meet the demands of all kinds of companies. For example, we are a leading international provider of global PEO (Professional Employer Organization) and Employer of Record (EOR) solutions in China. These are GEO (Global Employment Outsourcing) services that are designed to allow you to enter target markets with no need for a local entity.
An international PEO or means you can hire your workers in China with all elements of HR and payroll handled for you together. This way, you can be assured of full legal compliance with local labor laws for a single monthly fee.
Finally, our global payroll team ensures your locally based employees are fully covered with total due diligence. Employment contracts through our PEO or EOR are also expertly crafted to be in line with all local requirements.
Save on time and costs associated with expansion. Contact our team of global expansion experts today to learn more.