Sales Office Via Labor Dispatch
A sales office in China is one of the most common ways to physically represent a foreign company in the Mainland. Its flexible structure allows a firm to conduct most commercial and promotional activities without restrictions. There are hundreds of hosting platforms and work stations in every city in China, although one must be sure of one’s special needs in order to find the right system for you.
The foreign company decides what type of rental is best to establish the sales office, the geographical location and the size of the office, but these aspects do not alter the employee’s legal or administrative situation. This type of local structure requires the in-country presence of at least one employee. The main objective of a sales office is settling an enterprise in China via its representative without any financial or legal hurdles. It is the foreign enterprise’s role to install its employees in China in the best conditions in order to facilitate the company’s growth and satisfy the local needs (client proximity, suppliers and partners, local team diversification, etc…)
The second phase of establishing a physical representative in China, after establishing a physical office, is to recruit more representatives in the Chinese market. Allowing the foreign firm to expand quicker in such a big market.
Conditions and Procedures
A sales office does not entail any obligations during the establishment phase besides the representative’s presence in China. No financial input is required other than the office rental or work place fees. The rental cost varies depending on factors such as location and landlords’ conditions. Note that it is normal to pay a few months rent in advance as a deposit.
Therefore, the sales office cost is composed of the representatives’ salary, office rental and facilities (Internet, Phone line, etc…).
While, the payment method varies according to the landlord’s preference, it is always possible to pay in RMB (local currency) and, if necessary, via invoicing services issuing fapiaos (taxed receipts).
– Free choice of physical presence in regard to activity, clients, partners, suppliers, etc..
– Not limited by the number of hosted representatives
2. Operational Cost
– Monthly management fee depending on budget
– No minimal capital investment required except for a deposit
– No taxation or administration fee is involved in the establishment, administration and registration procedures
– The establishment phase is the less time-consuming compared to a WOFE, JV or representative office.
1. Invoicing / Outsourced Payments
– All payment procedures in China are supervised by a local invoicing/payment partner.
2. Contractual limits
– All labor contracts must be validated by the foreign company’s headquarters
– All funds and benefits are directly transferred out of China. The funds kept in China are administrated by the dispatched employee’s administrative partner.
A sales office is the simplest market entry method in order to begin commercial activity in China. It is recommended for a foreign firm in order to assure a well administrated initial phase no matter the province or scope of activity.
This type of structure is normally and eventually transformed into a WOFE once the commercial activities have stabilized. The transition into a WOFE as a Chinese subsidiary also involves the start of independent administration of invoicing and human resources (visa, expenses management, work and residence permits for foreigners, tax declaration, payments Chinese staff employment, social security and medical insurances).