How to Establish a Representative office in China?_Gomax International Service Center

How to Establish a Representative office in China?

Updated Guide – July 2025 | Gomax International Service Center

A Representative Office (RO) is a practical option for overseas companies looking to enter the Chinese market efficiently and with lower upfront investment. While it does not offer full business operations, it allows you to conduct market research, liaison activities, and promotional work.

1. 📌 What Is a Representative Office in China?

Not a separate legal entity—ROs act as an arm of the foreign parent company, which bears full legal liability
Cannot conduct profit-making activities—ROs are strictly limited to non-commercial functions such as market research, business development, and liaison services
No issuance of invoices or contracting authority in China

2. ✅ Key Benefits and Limitations

▶️ Advantages:

Lower setup cost and faster registration compared to WFOEs—typically completed in a few weeks
No mandatory registered capital requirement; operating expenses are paid via overseas remittance

▶️ Limitations:

Prohibited from profit-making, invoicing, or contracting in China .
Must hire Chinese employees via authorized HR agencies (e.g. FESCO); cannot employ directly .
Subject to taxation: typically a 10–15% tax on gross expenses.
De-registration and annual compliance reporting can be complex and legally burdensome.

3. 📋 Eligibility & Pre-requisites

The overseas parent company must have been in operation for at least 2 years.
Foreign individuals or partnerships cannot establish ROs—only recognized corporate entities qualify .
A minimum one-year commercial lease is mandatory, in a building approved for enterprise registration. Virtual addresses are generally not permitted in major cities like Shanghai or Beijing.

4. 🛠️ Step-by-Step Set-Up Process

Pre-registration:

Lease compliant commercial premises and collect landlord documents:

Property ownership certificate
Landlord’s business license
Building filing or approval documents; sublease letter if applicable.

Prepare notarized and legalized documents:
• Parent-company certificate of good standing & business licence (notarised, apostilled, legalised by the PRC embassy/consulate)
• Board resolution or letter of appointment naming the Chief Representative and any additional representatives.
• Passport copies, CVs and recent photos of the Chief Representative and foreign staff.
• Bank reference letter confirming the parent company’s financial standing.
• All documents must be translated into Chinese by a certified translator

Registration:

Submit documents to the local AIC (formerly SAIC) or relevant industry ministry (e.g. MOFTEC for trading, PBOC for finance) for approval—decision usually within 30 working days
After approval, register with:

AIC for business license
Public Security Bureau for company chop seals
Tax Bureau, SAFE, Customs, Statistical Bureau as required.

Create three official seals (chops):

Representative Office seal
Chief Representative seal
Financial seal
File these with Public Security Bureau.

Open bank accounts in RMB and optionally foreign currency. Then register tax, customs, and SAFE accounts as applicable.
Staff hiring: Only foreign staff may be directly employed. Chinese hires must be contracted through FESCO or similar agencies .

5. 🗓️ Timeline & Cost Overview

Approval phase: ~30 working days
Document legalization and chops setup: 10–15 working days
Bank/account registrations: additional 1–2 weeks
Total setup time: approximately 6–8 weeks
Initial compliance costs: rental, notarization/legalization, seal-carving, advisory fees; typically several thousand USD or RMB depending on city and agent support.

6. ⚠️ Compliance Considerations & Risks

An RO cannot perform revenue-generating operations—violations could result in Fines ranging RMB 50,000–500,000
Monthly tax filings even if no revenue.
Annual audit report and renewal of the RO registration certificate (one-year term, renewable)
Annual reporting is mandatory between March and June: must disclose structure, expenses, activities, and financial audit data .
Changes in address, chief representative, or business purpose must be reported and re-approved.

7. ✅ Is an RO Right for You?

ROs suit foreign companies exploring the Chinese market, conducting liaison, marketing, and establishing local networks.
Not suitable if you plan to generate revenue in China, issue invoices, or have direct labor contracts—these tasks best suit WFOEs or other foreign-invested structures. Transitioning from an RO to a WFOE is often time-consuming and costly

📬 Contact Gomax for Expert Setup Support

Let Gomax International Service Center guide you through every phase—from landlord documentation and notarization to seal carving, HR setup, and compliance reporting.
Email us today: marketing@gomaxgroup.com