Posts Tagged ‘representative office’
New Regulation on Administration of Representative Offices in China
Monday, December 13th, 2010On November 19, 2010 the State Council promulgated Regulation of the Administration of Representative offices of foreign enterprises (order of the State Council no. 584). Regulations will come into effects on March 1, 2011.
The previous Regulations provided that Representative Office shall only engage in activities which are not profit-generating unless otherwise stipulated by the agreement between China and the country in which foreign enterprise resides. The Regulations promulgated recently expressly provides that activities related to the business of the foreign enterprises which a Representative Office may engage in includes:
- market investigation, display, promotional activities in connection with the products or services of foreign enterprises;
- Liaison activities in connection with products sales, services provision, domestic procurement and domestic investment of foreign enterprises.
Article 35 of the Regulations expressly provides the legal liabilities for the engagement in profit-generating activities and increases the fine and legal liabilities for such violations, including ordering a Representative Office to correct and confiscate the illegal gains and the tools, equipments, raw materials, products (commodities) and other property that are specially used for engaging in profit-generating activities, and imposing a fine of no less than RMB50 000 and no more than RMB500 000. In egregious cases, the registration certificate of a Representative Office shall be revoked.
The Representative Offices shall provide an annual report to the Registration Authorities between March 1 and June 30. The content of such annual report shall include the legal existing and standing information of the foreign enterprises, the information on the carry-out of business activities of the Representative Offices and the information on the expenses and expenditure and revenues audited by their accounting firms and other related information.
Failure to provide such report will result in a penalty of RMB10000 to RMB30000.
The Regulation provides the new rules for the publication of the establishment registration. The Regulations provide that the registration authorities shall record the registration matters of a Representative Office in the registrars to be made available to or copied by the general public. Moreover, the Regulations provide that foreign enterprises shall announce the establishment or change of the Representative Offices to the general public via media designated by the registration authorities.
Did you invest in China?
Thursday, October 29th, 2009Chinese official says that a large amount of the global top companies have invested in China Since the mid-1990s, and more and more overseas companies have been making their way into Chinese market. The investment covers almost all fields like the manufacturing, service, and rural infrastructure construction sectors, ect. And meanwhile Chinese investment environment has been improving in a large scale which has attracted more and more foreign investors.
Even though the high-tech and trade service industries were most favored by foreign investors, projects funded by foreign companies involve oil, chemical, electronic, machinery, computer, telecommunication equipment, ect. Nearly 90 percent of the projects funded are located in coastal areas and cities such as Shanghai, Guangdong, Jiangsu, Beijing and Shandong, ect.
For some new companies, they usually set up representative offices to do some market research and test the market before they commit themselves to invest in China. By using both the markets and resources from their own homes and China, these companies have remarkably improved their international competitiveness.
Hong Kong companies and China visa issues
Saturday, April 4th, 2009One question that we often get from our clients is whether registering a Hong Kong company can help in obtaining a business visa or a residence permit in China. The answer is NO. Although part of China now, Hong Kong is in reality a very separate jurisdiction, as per the “one country two systems” policy. Hong Kong companies are considered as foreign companies in China, and investment from Hong Kong into the mainland is considered as foreign investment. In that regard, operating a Hong Kong firm is not more helpful to get any visa facility for mainland China, than say a BVI or US company.
The proper way to get a one year residence permit in mainland China as an owner of a Hong Kong company, would therefore be to open a representative office in China for that company, if one doesn’t want to invest in a WFOE (wholly foreign owned enterprise). Obviously additional fees will apply. In most cities it will take about 4 to 6 weeks to process the representative office registration.
