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Points for Attention for Foreign Enterprises to Establish A Resident
Representative Office in China
Since China has carrying on the open-door and reform policy, more and more
foreign enterprise take China as the core of their investment and development.
It is usually the first step of their investment in China by establishing a resident
representative office.
From October 30th 1980, Chinese government has promulgated seven laws and
regulations in this area. Among them, the Ministry of Foreign Trade and
Economic Cooperation, People's Bank of China and Ministry of
Communications issued specific regulations for resident office belong to the
industries under their administration. As the lawyers of Tianping Law Office,
we will make a brief introduction to the procedures of establishing a resident
office of a Foreign Enterprise according to our experience in handling matters
in this area.
To establish a resident representative office in China, you shall obtain the
relevant government authorities' approval firstly. The enterprises' headquarters
shall prepare detailed application documents, such as an application letter, a
credit certificate of the enterprise, the description of the potential office and
other document, then you should submit them to relevant authority. The
enterprise shall submit its application documents to different authorities as
follows according to different industry the potential office belongs to:
1. A trader, manufacturer or a shipping agent should apply to the Ministry of
Foreign Trade and Economic Cooperation of the People's Republic of
China for approval;
2. A banking or insurance institution should apply to the People's Bank of
China for approval;
3. A maritime shipping operator or a Maritime shipping agent should apply to
the Ministry of Communications of the People's Republic of China for
approval;
4. An air transport enterprise should apply to the General Administration of
Civil Aviation of China for approval;
5. Enterprises out side these lines of activity should, according to the nature of
their operations, apply to the proper commissions, ministries or bureaus
under the Government of the People's Republic of China for approval.
After be granted the approval for establishment application, the chief
representative of the representative office shall, usually within 30 days of the
date of approval, carry out registration procedures with the local Industry and
Commerce Bureau by presenting the documents of approval. If there is a failure
to register within the time limit, the document of approval shall be
automatically invalid and recalled by the examination and approval authority.
After obtain the registration certificate, the representative office shall carry out
other relevant procedures as follows within stipulated time limit:
1. File its record, making official stamps and do the affairs of resident card or
Visa or provisional resident card for its representatives and their families in
the Public Security Bureau;
2. A foreign representative shall get a working card from the Labor Bureau;
3. Do tax registration in the taxation authority and take the "tax registration
certificate";
4. In case the office import office appliance, articles for daily use and means
of transportation, it shall file record to the local Customs authority;
5. Open bank account in the appointed banks(usually the Bank of China);
6. If the office intend to recruit Chinese employees, it must entrust the local
foreign enterprise service unit as designated by the government to carry out
the employment matters, and shall registrate to the local industry and
commerce administration authority, then get the "representative card" or
"employee card".
After completion of all the above procedures, a resident representative office
then legally established in the People's Republic of China.
Combining the experience in this area of our office, we think there are several
points should be noticed during the establishment and operation of the office:
1. The resident representative office has a maxim approval resident period, it
may different from 3 years to 6 years, the office shall apply for extension to its
former approval authority before the end of its resident period if it want to
extend its resident time.
2. the validity period of its registration certificate is usually one year, so before
each expiration date, the office shall make extension procedures to the industry
and commerce authority.
3. a resident office may only engage in indirect business operations within the
territory of P. R. China, such as to represent its enterprise in conducting
business liaison, product introduction, market surveys and research , and
technological exchange within the scope of business of that enterprise. The
office are not permitted to enter into any agreements or contracts with any legal
or natural persons where such agreements or contracts would result in income
for the representative office, nor may they engage in any other operational
activities.
4. There is one more point to draw you attention, that is a representative office
must rent a office building with foreign leasing qualification, you could ask the
landlord to show you "the foreign leasing qualification certificate", and the rent
office could only be used as a working place instead of a resident as well. Or,
the office will not obtain the relevant government authorities' approval and
registration.
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