What is Foreign Representative Office (RO) in China? How should I choose?

A representative office is a non-legal entity office set up in China to represent parent company. Basically a representative office is prohibited from carrying out business directly, but it is essentially used to monitor trading, market products and/or services, source suppliers, quality control, market research, business liaisons and technical exchange on behalf of an offshore company within the scope of their operations. It is considered as the first step to enter into China market, which generates a long-term presence in China.

Advantages of RO

• Simpler and cheaper to set up
• No Registered Working capital is called for
• Relatively lower startup costs
• Open to almost all industry sectors (including some sectors that are off-limits to Articulation Ventures and Wholly Foreign Owned Endeavors)

Reasons for setting up RO

• To have Preliminary research before deciding whether or not to do a direct investing in China.
• To organize the activities of its parent company in China.
• To do traveling agreements for representatives of its parent company or Chinese clients or potential clients.
• To employ local employees to aid them encountering providers.

Application

• Applicant should obtain approval from the respective authorities.
• Registration should be made with the Administration For industry and Commerce. The foreign enterprise may engage an agent authorized by local Foreign Economic Relations and Trade Committee to handle its application on its behalf.

Approval authorities

Authorities for approval are distributed among various State Council Departments and are delegated to their local offices. Applicants should apply for approval from different departments (at their local offices) according to their core activities. Some of the major types of industries and their approval authorities are: