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Set Up a Representative Office in Guangzhou China, Establishing Rep Office (RO) in
Guangzhou, Guangzhou Rep Office Setup Procedures
Brief Introduction to Guangzhou
Guangzhou is situated at the heart of the most-populous built-up metropolitan area in
mainland China, an area that extends into the neighboring cities of Foshan, Dongguan,
and Shenzhen, forming one of the largest urban agglomerations on the planet.
Guangzhou is regarded as one of the central cities of China and core cities of the Pearl
River Delta, Guangzhou has long been the top choice for multinationals for investment
deployment in China since China's reform and opening-up.
With the improvement of industry vitality, infrastructure, business cost, talent and
innovation, the city will attract more global capital, technology, talent and information,
and make itself more internationally competitive.
283 Fortune Global 500 companies, have established their Chinese branch headquarters
in the city. Microsoft, IBM, Samsung and Cisco are among the many that have chosen to
make Guangzhou their home in mainland China.
When investors have plans on establishing representative office in Guangzhou, it is
better for them to acquire more information in order to run a successful business in
Guangzhou. Setting up a representative office is the most inexpensive entry form for
foreign enterprises to enter the Chinese market. And about 20% of investing clients have
chosen Representative Office as their Guangzhou business entity since setting up a
representative office is cost efficient and it requires no capital investment. A
representative office basically is to serve as a liaison office between a foreign company
and its business partners in Guangzhou, and to coordinate the parent enterprise
activities in Guangzhou (travel arrangements, promotion etc.). Representative offices are
applicable for many industries: trading, shipping, consulting, etc. The Chinese
government has a name format for anyone who wants to setup a representative office
(RO) in China, the format is: country (area) + parent company name + Guangzhou
An RO has no legal personality, meaning it does not possess the capacity for civil rights
and conduct, cannot independently assume civil liability, and is limited in its hiring ability.
Chinese staff working for an RO, although not limited in number, must be employed
through a human resources agency that will sign a contract with the RO on the one hand
and with the Chinese staff on the other in order to ensure social security and housing
fund contributions are paid on a regular basis. No more than four foreign employees can
be hired per RO. Foreign staff working for ROs should have an employment relationship
with the parent company abroad, and any disputes should be settled under the laws of
ROs are usually taxed on gross expenses with the overall tax burden around 11.75
percent of total monthly expenses; however, these rates may be increased by the
relevant tax bureau according to the industry. If the chief representative is a foreign
national, whether they stay in China or not, they shall be subject to individual tax based
on the income derived from the RO.
Setting up a representative office in Guangzhou China primarily requires 4 stages and
this entire process can take up till 2-5 months time.
- Pre-approval Stage
Once you have decided to base your representative office in which city, the next thing is
to approach the local Ministry of Commerce (MOFCOM) for contacts of a local
designated foreign enterprise service company (FESCO) who will be in charge of your
representative office application process. You should be paying approximately US$800 to
$1000 to a designated FESCO for their service of notifying you on the relevant upcoming
deadlines and administrative procedures. In addition, a signed lease agreement is one of
the pre-requisite for the approval;
Therefore it is vital to secure a lease for a “grade A” office space before submitting the
Stage 2 - Application Stage
Generally your application approval should be done by MOFCOM, but if your industry is
specific to banking, insurance, law, accounting and media, you may have to approach the
relevant authority which has jurisdiction over your industry sector. Once approved, you
should have the Certificate of Approval certifying your legal presence for the next 3
years which can be further extended.
Stage 3 - Registration Stage
This stage is to register for your representative office’s business license which must be
renewed annually. It is important to note that you must complete the registration within
30 days of your approval from stage 2. The application together with the supporting
documents is required to be submitted to the local State Administration of Industry &
Commerce (SAIC and the process normally takes about 1-2 months time.
Stage 4 - Post Registration Procedure
Firstly, In China, it is expected for your representative office to register the office location
with the local police (Public Security Bureau) and to register with local and national tax
Secondly, you should make financial and corporate seals as it is a practise in China to use
them on official documents. Thirdly, opening a foreign exchange bank account will aid to
facilitate overseas fund transfer. Fourthly, to import the relevant equipments or
materials, remember to complete the relevant customs registration. Lastly, get a FESCO
to assist you in recruiting of Chinese staff.
Once all this is done, your representative office is set to establish its presence in China.
However before getting to this stage, a good market research study is required to ensure
that your products or services are viable in the Chinese market.
1 A representative office may, however, negotiate contracts that are later signed in the
name of the home office located outside China.
2 The application letter should contain, in part, the following: a description of the
company’s history, business and scope; the names of the Chairman of the Board, the
General Manager and directors; the names of its major trading partners in China; its
business volume; the proposed name of the representative office; the purpose for
setting up the representative office and the scope of its activities; the duration of the
office and its chief representative.
3 Head office incorporation documents include certified copies of the company’s
business registration certificate, the certificate of incorporation, the memoranda and
articles of association, etc.
4 Other post registration formalities include: registering with the tax bureau; opening a
bank account; completing a residence application with the with the local Public Security
Bureau; applying to the Customs Administration for permission to import office
equipment and daily necessities for use by the representative office and its personnel;
Set Up a Representative Office in Guangzhou is a big project by itself, which requires
financial and time commitments, business management knowledge and China expertise.
Identifying a competent agent to manage the complex process will be a cost and time
effective way to avoid potential pitfalls
Since 2006, Tommy China Business Consulting has been focusing on consulting services
for our clients to Setting up a Representative Office (RO) in Guangzhou
Please visit http://www.tommyconsulting.com/CorporateFormation.html
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