What is a Representative Office? (RO)

First of all, the parent company must have an establishment period of more than 2 years, this requirement can be reviewed in the State Administration of Industry and Commerce's file: Gong Shang Wai Qi [2010] No.4

A Representative Office (RO) is set up by overseas entities to participate in business tenders, quality control, promotion of products, investigation of markets, technology transfer and other allowed types of works in China.

Representative Offices cannot participate directly in operational works, they also cannot give formal invoices and also cannot get payments from customers. The State Administration of Industry and Commerce (SAIC) often defines in the range of activities, as show in the in the certification of registration of this type of entities, that they can’t participate directly in operational works. Because of this, this type of company doesn’t count as a form of foreign investment (FDI) in China. Still, some Representative Offices do operate according to regulations or in a clearly allowed manner while making part of one of the direct investment forms in China. For example: Representative Offices of overseas law firms, Representative Offices of overseas airline companies, and more. 

 
A Representative Office established within Chinese territory can only participate in activities that are categorized as non-profit, they can do the following: 

1. Engage in market research and surveying activities for its mother company.
2. Liaise with local and foreign contacts in China on behalf of the parent enterprise;
3. Engage in data research and give its potential customers or cooperators promotional content. 
4. Coordinate the mother company’s operations in Chinese territory. 
5. Help the representatives of the mother company and customers to plan their business trips to China.

A Representative Office in China cannot do: 

1. Engage directly in any kind of for-profit business activities.
2. Help its mother company sign any kind of contractual document. 
3. Engage in any kind of representation for any company other than its own mother company. 
4. Receive payments or engage in invoicing in for services or products provided in China. 
5. Acquire property or import manufacturing equipment.

Company Types

Marketing Research in China	Product Promotion
Representative Offices also have a commonly used name: Liaison offices, this is because these companies can engage in activities like market research, customer or supplier liaising, promotion, and rent of offices and personnel.	Are outreach activities your target in China? If so, a representative office is the best answer! A Representative Office is a very specific kind of company which is aimed at entities that want to have a presence in China that isn’t linked to international trading.
Quick Set-Up Time	Probing the Market
A Representative Office (RO) is a low cost, quick option for overseas companies to set up in Chinese territory. Overseas companies often use Representative Offices for business operation that are not directly for profit, this often means promotion of products, research, engagement, etc.	A Representative Office can give you many chances to improve your operations and enter more in the Chinese market, it allows businesses to probe markets and ensure their money and tactics are well placed before making a full engagement in China.

Knowledge You Must Have Before Registering a Representative Office in China

Since Representative Offices are one of the most popular overseas business options in China, they give many chances to improve operations and engagement within the markets in China, with them companies are able to probe markets to ensure their money and tactics are well placed before making a full engagement in China.


Advantages of Representative Offices

■ Very fast set-up time
■ No need to have registered capital
■ Lower taxes compared to other company types (no corporate or divided taxes)
■ Very usable, low cost solution
■ Provides a great channel with customers and factories within China, improving company flexibility
■ Gives you the chance to have a physical presence in China
■ Enables you to recruit both local and overseas staff
■ Enables you to manage products and providers from China itself
■ Gives you better quality control
■ Makes the following and updating of marketing strategies easier


Disadvantages of Representative Offices

■ Restricts any kind of operation that generates profit (For example a Representative Office can’t sell or make money)
■ Is only able to provide services to its mother company
■ It cannot participate in contracts with clients in China 
■ Is unable to conduct trade or business activities with external companies 
■ It is unable to directly recruit personnel, it can only do it through authorized third parties 
■ You must rent an office before starting the Representative Office registration process