28 Sept 2017
Online CBA: What Procedures Should a Foreign Enterprise Follow When Looking to Establish a Representative Office in China?
Q: What procedures should a foreign enterprise follow when looking to establish a representative office in China?
A: In line with the Regulations on the Administration of the Registration of Resident Offices of Foreign Enterprises, a foreign enterprise can apply to have a representative office established within Chinese territory via the State Administration for Industry and Commerce or any of its duly authorised subsidiary bodies. Registration, however, does not confer legal entity status upon any such representative office and it is only authorised to conduct non-profit generating activities, all of which have to fall within the expected business remit of its overseas parent company.
Acceptable activities include the following business procedures:
- Market research, advertising and other promotional activities relating to the products or services of the foreign enterprise
- Liaison activities relating to the sale of products, provision of service, domestic procurement and domestic investment of the foreign enterprise
Each representative office is obliged to submit a report to the State Administration for Industry and Commerce on an annual basis. This report must be submitted between 1 March-30 June every year and should include documentation confirming the active status of the foreign enterprise concerned and a record of the business activities undertaken by the representative office. An officially-audited account of the representative office’s income and expenditure must also be submitted.
In the event of any substantive changes occurring to the status, standing, ownership or management of the representative office, the information held by the State Administration for Industry and Commerce must be updated in accordance with the prevailing requirements. This stipulation also applies in any instances where a representative office is closed or otherwise decommissioned.
The following details must be submitted when applying for initial registration and updated in the event of any changes:
- Name of the representative office (consisting of the following elements in this order: Nationality of the foreign enterprise, Chinese name of the foreign enterprise, name of the city where the representative office is located and then the words “representative office”)
- Name of chief representative
- Scope of business
- Place of residence
- Period of residence
- Name and address of the foreign enterprise concerned
For each representative office, the foreign enterprise must appoint a chief representative. This designated individual will then be responsible for signing the required registration application documents on behalf of the overseas company in line with the scope specified in an initial letter of authorisation. In total, a foreign enterprise may appoint up to three representatives depending on their particular business requirements.
All foreign enterprises applying to establish a representative office are required to submit the following documents to the registration authority:
- Application letter for establishment and registration of representative office
- Foreign enterprise’s proof of address and business licence (which must have a validity of at least two years)
- Foreign enterprise’s articles of association or organisation agreement
- Foreign enterprise’s letter of appointment for its chief representative(s) and other representatives
- Identity certificates and resumes of the chief representative(s) and representatives
- Credit report issued by the foreign enterprise’s primary banking partner
- Proof of the lawful utilisation of the premises where the representative office is to be located
Within 15 days of receiving the initial application, the relevant registration office will confirm whether or not the application has been successful. Should the application be approved, a registration certificate and all relevant representative certificates will be issued to the applicant within five days of the initial approval date. The representative office, chief representative(s) and representatives can then apply for permission to reside, take up employment, pay tax and conduct foreign exchange registration by presenting the registration certificate and representative certificates to the appropriate bodies.
For further details, please refer to the following:
Regulations on Administration of Registration of Resident Offices of Foreign Enterprises (State Council Decree No. 584)