Representative Offices in China
Print
E-mail

Welcome to ChinaInvest.biz Magazine - May 2011 Issue

Klako Group presents ChinaInvest.biz - a monthly magazine providing insight into investment, tax and operational issues for foreign companies entering and expanding throughout China.

With the issuance in November 2010 of the Administrative Regulations for the Registration of Resident Representative Offices of Foreign Enterprises (Representative Office Registration Regulations) and the Circular on Releasing the Tentative Measures for Taxation of Resident Representative Offices of Foreign Enterprises (Circular 18), the Chinese government has imposed more stringent rules on the establishment and maintenance of Representative Office's in the aim of strenghening its supervision capabilities. In this issue we aim to outline these new regulations highlighting the new challenges that incoming and existing Representative Offices will be facing.

We hope this information can be an informative tool for all companies looking to enter and expand into China using a Representative Office as a vehicle of choice.

Labor Law is a relatively new phenomenon in China, with the first comprehensive law passed
in 1994. The new law, adopted by the National People’s Congress (NPC) on 29th June 2007,
looked to redress some of the poor working conditions found in China, particularly for the
average worker. Prior to the passage of this law, most Chinese employee’s in small-medium sized
firms lacked employment contracts. Morever, they were short-term, giving employers the flexibility to
frequently bring in a new, often cheaper hires whenever they saw fit.


Representative Offices in China

The easiest and most economic way for Small and Medium-Sized Enterprise's to have a legal presence in China is to establish a Representative Office (RO). However due to the Administrative Regulations for the Registration of Resident Representative Offices of Foreign Enterprises (Representative Ofifce Registration Regulations) and the Circular on Releasing the Tentative Measures for Taxation of Resident Representative Offices of Foreign Enterprises (Circular 18) issued in November 2010 and effective from March 2011, setting up a RO may no longer be an optimal solution.

According to these regulations, a RO continues not to be a separate legal entity (i.e. it is tied to its parent company) and it cannot carry out direct revenue earning business activities (i.e. it cannot enter into purchase/sales contracts and cannot receive payments for products or services, issue invoices or repatriate monies overseas). The new Regulations indicate clearly what the permissable activities are:

  • Market Research, product display and publicity activities relating to the foreign company's products or services, and
  • Liaison activities relating to the sale of products or provision of services, and local procurement or investments, by the foreign company

To read the full article, please click here to view the magazine (PDF file)


If you require assistance with the above subject, please contact us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

All information in this report is verified to the best of our ability and is assumed to be correct at time of release; however, Klako Group does not accept responsibility for any losses arising from reliance on the information provided within.


Free Consultation with China and Hong Kong Legal & Tax Advisors


The directors of Klako Group will be travelling throughout the year to met with partners and clients and to participate in trade and tax-related events. Should readers or clients fo the firm wish to meet our directors face to face during their trips to discuss matters concerning Hong Kong and China business investments, please contact us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Appointments will be made on a first come, first serve basis. The visits of our directors provides an excellent opportunity to all our readers to discuss first hand their own investment potential, opportunities and legal/tax updated for Hong Kong and China in detail.

 

Below is the tentative scheduling for 2011.

 

June 1st -17th 2011: Canada, USA, Mexico

July 25th-29th 2011: Netherlands, France

September 13th-17th 2011: London, England

September 26th-30th 2011: Germany

October 12th-31st 2011: India, France, Turkey

To view the full schedule, please click here (PDF file)