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Representative Office 2018-06-11T15:22:04+00:00

Representative Office Creation

Analyze & Investigate the Market

As a representative office cannot engage in commercial or profit making activities, it is mainly utilized to perform secondary business activities mandated by a parent company established abroad:

  • Studying the market in another territory while promoting the foreign company
  • Creating a contact network, gathering information and developing advertisement
  • Renting commercial and residential premises
  • Due to the limited operational range, the average duration of a representative office is 2 years

In such a configuration, the representative office cannot sign contracts or bill customers. However, this form of implementation allows foreign companies to perform marketing and research activities in order to see if China is a viable option. Due to the limited operational range, the average duration of a liaison office is 2 years.

Keypoints

  • Low establishment cost without minimal share capital required

  • Cannot receive payments from Chinese clients

  • Low taxation. Based on expenses

  • Cannot transfer a representative office to a WFOE

What Are the Conditions?

  • A Chief Representative must be assigned from the parent company as the responsible party for the operations.

  • On a monthly or quarterly basis, the representative office is subject to a 10% of taxation on its expenses.

  • Representative offices can only be located in “Grade A” buildings or buildings mandated by the government. 

China Market Entry Vehicles

Have a broader perspective on China’s market entry vehicles

WFOE

Setup time

3 – 6 months

Commercial activity type

Direct (by WFOE)

Administrative task

High

Hiring capacity

Medium

Incorporation cost breakdown

Enterprise + Office + Staff
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SALES OFFICE

Setup time

0 – 1 month

Commercial activity type

Indirect (by local partner)

Administrative task

Low

Hiring capacity

High

Incorporation cost breakdown

Office + Staff
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REP. OFFICE

Setup time

2 – 6 months

Commercial activity type

Indirect (by local partner)

Administrative task

High

Hiring capacity

Medium

Incorporation cost breakdown

Enterprise + Office + Staff
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JOINT VENTURE

Setup time

3 – 12 months

Commercial activity type

Direct (by JV)

Administrative task

High

Hiring capacity

High

Incorporation cost breakdown

Enterprise + Office + Staff
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