When the phrase “offshore investment” is mentioned, one of the jurisdictions that ring in investors’ minds is China. The country is an investors’ paradise, offering a full range of benefits that you are not likely to get elsewhere. It has a rapidly growing economy, a large market of more than 1.4 billion people, and supportive administration. You can never go wrong with a company registered in China.
To take advantage of this fast-growing jurisdiction, the first step is selecting the right investment vehicle. Indeed, there is quite a number, with the most preferred one being a wholly foreign-owned enterprise (WFOE). Others include joint ventures (JVs) and representative offices (RO). In this post, we take a closer look at the representative office (RO) to demonstrate what it is, key benefits, disadvantages, and how to register it fast.
What is a Representative Office (RO)?
This is the simplest type of company that you can form in the People’s Republic of China. As the name suggests, a representative office (RO) is considered a branch or extension of the parent company back home. Therefore, it can only exist as long as the parent firm is flourishing.
According to the company laws in China, a representative office (RO) can only be allowed to engage in non-profit activities in China. If you want to focus on profit-making operations, the best thing would be registering a WFOE or creating a joint venture. Activities that you can use an RO include:
- Market research in China.
- Scouting for potential partners.
- Building networks and supply chains.
- Running marketing campaigns.
- Offering support for teams doing research for the parent company.
Pros and Cons of Forming a Representative Office (RO) in China
The following benefits of setting up a representative (RO) office in China make it one of the most desirable company vehicles. However, you need to compare them with the cons as well as other company formations to make the big decision. Let’s get to it.
- Quick setup.
- No registered capital is needed because the company is a branch or the parent company.
- Subtle taxes compared to other types of companies.
- It is an affordable type of company to use in China.
- Helps you to study the market easily, especially when targeting to open major businesses like a manufacturing plant.
- Not allowed to run profit-based business.
- Your parent company must be a limited liability company.
- Can only exist as far as the parent company is existent.
Register a Representative Office with the Assistance of a Professional Agency
Now that you know the benefits that come with registering a representative office (RO) in China, are you ready? If you are, the best way to go about it is using an agency of professionals. These are experts who specialize in China company setup and executive functions.
Instead of following the complex process of preparing all the required documents and dealing with different departments alone, the professionals will do the work. Having been in the Chinese market for years, they can help you to complete the company registration fast and affordably. Indeed, they go beyond company registration.
With the right agency of experts, you can also be assisted with additional tasks, such as accounting and payroll management. You will find the experts very helpful, especially when it comes to accounting where the parent company follows the International Financial Reporting Standards (IFRS), but the accountants are not conversant with the Chinese Accounting Standards (CAS).
This post has demonstrated that incorporating a representative office (RO) in China comes with unique benefits, especially when not targeting profit-making operations. You will enjoy even more benefits by working with an agency of experts. The professionals can serve as your guide, helping to complete the process fast and taking advantage of emerging opportunities.