an easy way to get Z visa and office started in China

Printer-friendly version

Title:dada-hongkong Register Guangzhou Representative Office

Advantages and Disadvantages of establishing a Rep Office

What is a RO in China?
Representative Office (RO) is fairly quick, relatively inexpensive and easy to set up in China. It is established by foreign companies or entities involved in business activities which is not going to generate direct profits through the office. They are not allowed to operate as partnerships or sole proprietorships in China, as they are not recognized as legal persons. However, they are allowed and encouraged to conduct “indirect operational activities’, such as engaging in business liaison, product promotion, market research, exchange of technology and other permitted activities in China.

Why use a RO?
RO is typically and frequently used to test the China market and probably the most common form of foreign presence in China. The RO is an excellent means by which a foreign company can become further involved in the Chinese market. Following are some reasons why a foreign company sets up a RO: A foreign company looking for Chinese suppliers or looking to make a direct investment in the Chinese market, but feels it needs to do more market research before it decides on a long-term strategy for entry into China. A foreign company has already got existing markets for its products or services in China, but the Chinese market is not large enough to sustain a full-blown investment in China.

Advantages of establishing an RO
1. No registered capital required.
2. Easy to control than others business type in Hr or Tax issue
3. The quickest, relatively inexpensive and easy to set up.

Disadvantages of establishing an RO
A. RO is limited in the nature of the business activities in which it can engage, cannot receive any fees for its service or engage in any profit-making activities. Restricted activities include:

Rendering services to any persons other than its head office
Soliciting, concluding or signing business contracts with any customers or issue invoice in China.
Warehousing and managing inventor conduct in China for trading purposes
Other business trade or activities; whatever is directed or conducted on behalf foreign parent company. Any activities other than of a liaison nature (e.g. quality
control services and installation and testing services).

B. RO cannot employ staff directly. Essentially, an RO must use an authorized human resources agency in hiring its staff.