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Setting Up Your China Rep Office. What It Really Takes.

By Dan Harris and Steve Dickinson

I feel a little bit silly doing this post right on the heels of my having done a number of posts on how China Rep Offices are becoming such a rarity (here and here). However, the post from which I got this idea is so good and so much of its information is relevant to establishing any business in China, that I just could not resist. The post is from the Foreign Entrepreneurs in China blog and it is entitled, "Setting Up a Representative Office in China (I): 10 Steps and Some Practical Tips" and it is based on a conversation with Barbara Cisneros from INAEL Electrical Systems SA, a Spanish company that established its Representative Office in Shanghai in 2008. I really like the post because it collects in one place so much of what my firm tells its clients over time as we help them establish an office in China. So here are some of Ms. Cisneros's Rep Office steps/tips: 1. Get Help in Obtaining the License. There is a huge amount of paperwork and you will not be able to do it on your own. Ms. Cisneros's company used a Spanish law firm as they "also needed to legalize/authenticate paperwork for Spain." Smart move. We are always telling our clients that one of the benefits to using my firm is that we can help them with both the China side and the U.S. side of the registration. 2. You Will Need to Designate a Chief Representative. You will need to designate a Chief Representative who will be authorized to act on behalf of the office. 3. - You Will Need to Register with the Tax Bureau. Ms. Cisneros used her law firm for this also. 4. - You Will Need Someone to Handle Your Accounting. Ms. Cisneros notes that you must pay "the income tax monthly and the office taxes every three months." I note that this creates a real hassle and we always strongly recommend our clients either bring in an accountant/bookkeeper to handle this or contract out for this work. 5. - You Will Need to Use a FESCO Type Company to Hire "Your" Employees. Ms. Cisneros correctly notes that China Rep Offices are not allowed to hire employees directly; they must hire indirectly through authorized third party companies. Ms. Cisneros recruited her own employees, but used FESCO (Foreign Enterprise Human Resource Service Co) to actually hire them. 6. - You Will Need to Open a Chinese Bank Account. 7. - You Will Need a Proper Office. Ms. Cisneros correctly notes that China requires Rep Offices be established in buildings authorized for such business. The remaining three tips primarily deal with operations and I suggest you go to the post for those. With the exception of Number 5, all seven of the above tips apply with nearly equal force to foreigners registering any business in China.

Full post as published by China Law Blog on April 06, 2010 (boomark / email).