Guide to Setting up a Representative Office (RO) in ShenZhen China, Procedures of Set Up Rep Office in ShenZhen

Guide to Setting up a Representative Office (RO) in ShenZhen China, Procedures of Set Up Rep Office in ShenZhen

Shenzhen is located on the western coast of the Pacific Ocean and at the central section of the north-south coastline of China. Facing the opportunities and challenges of the 21st century, Shenzhen has set its long-term strategic objectives for social and economic development. In near future, Shenzhen is planned to become one of the international economic, financial and trade centers of the world

Setting up a company in Shenzhen is a good choice for companies that are in computer software, IT, microelectronics and components, video and audio products, electromechanical integration, and key projects of light industry and energy.

When investors have plans on establishing representative office in ShenZhen, it is better for them to acquire more information in order to run a successful business in ShenZhen China.

An RO has no legal personality, meaning it does not possess the capacity for civil rights and conduct, cannot independently assume civil liability, and is limited in its hiring ability. Chinese staff working for an RO, although not limited in number, must be employed through a human resources agency that will sign a contract with the RO on the one hand and with the Chinese staff on the other in order to ensure social security and housing fund contributions are paid on a regular basis. No more than four foreign employees can be hired per RO. Foreign staff working for ROs should have an employment relationship with the parent company abroad, and any disputes should be settled under the laws of that country

ROs are usually taxed on gross expenses with the overall tax burden around 11.75 percent of total monthly expenses; however, these rates may be increased by the relevant tax bureau according to the industry. If the chief representative is a foreign national, whether they stay in China or not, they shall be subject to individual tax based on the income derived from the RO.

Setting up a representative office in ShenZhen China primarily requires 4 stages and this entire process can take up till 2-5 months time.

 - Pre-approval Stage
Once you have decided to base your representative office in which city, the next thing is to approach the local Ministry of Commerce (MOFCOM) for contacts of a local designated foreign enterprise service company (FESCO) who will be in charge of your representative office application process. You should be paying approximately US$800 to $1000 to a designated FESCO for their service of notifying you on the relevant upcoming deadlines and administrative procedures. In addition, a signed lease agreement is one of the pre-requisite for the approval;
Therefore it is vital to secure a lease for a “grade A” office space before submitting the application.

Stage 2 - Application Stage
Generally your application approval should be done by MOFCOM, but if your industry is specific to banking, insurance, law, accounting and media, you may have to approach the relevant authority which has jurisdiction over your industry sector. Once approved, you should have the Certificate of Approval certifying your legal presence for the next 3 years which can be further extended.

Stage 3 - Registration Stage
This stage is to register for your representative office’s business license which must be renewed annually. It is important to note that you must complete the registration within 30 days of your approval from stage 2. The application together with the supporting documents is required to be submitted to the local State Administration of Industry & Commerce (SAIC and the process normally takes about 1-2 months time).

Stage 4 - Post Registration Procedure
Firstly, In China, it is expected for your representative office to register the office location with the local police (Public Security Bureau) and to register with local and national tax bureaus.

Secondly, you should make financial and corporate seals as it is a practise in China to use them on official documents. Thirdly, opening a foreign exchange bank account will aid to facilitate overseas fund transfer. Fourthly, to import the relevant equipments or materials, remember to complete the relevant customs registration. Lastly, get a FESCO to assist you in recruiting of Chinese staff.

Once all this is done, your representative office is set to establish its presence in China. However before getting to this stage, a good market research study is required to ensure that your products or services are viable in the Chinese market.

1 A representative office may, however, negotiate contracts that are later signed in the name of the home office located outside China.

2 The application letter should contain, in part, the following: a description of the company’s history, business and scope; the names of the Chairman of the Board, the General Manager and directors; the names of its major trading partners in China; its business volume; the proposed name of the representative office; the purpose for setting up the representative office and the scope of its activities; the duration of the office and its chief representative.

3 Head office incorporation documents include certified copies of the company’s business registration certificate, the certificate of incorporation, the memoranda and articles of association, etc.

4 Other post registration formalities include: registering with the tax bureau; opening a bank account; completing a residence application with the with the local Public Security Bureau; applying to the Customs Administration for permission to import office equipment and daily necessities for use by the representative office and its personnel; appointing a FESCO to recruit local Chinese employees; etc.

Set Up a Representative Office in ShenZhen is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls, Since 2006, Tommy China Business Consulting has been focusing on consulting services forour clients to Setting up a Representative Office (RO) in ShenZhen.

Contact Tom Lee for Set Up a Representative Office in shenzhen now

Email: tomlee@tommyconsulting.com, tomlee_cn@163.com,
WhatSapp/Wechat/Cell Phone: +86 18926401128, Skype: tomleeli
Tel: 86-755-25809219,Fax: 86-755-83256658

Set up The Wholly Foreign Owned Enterprise (WFOEs) in ShenZhen China, Process of Setup WFOE in ShenZhen

Set up The Wholly Foreign Owned Enterprise (WFOEs) in ShenZhen China, Process of Setup WFOE in ShenZhen

Shenzhen is located on the western coast of the Pacific Ocean and at the central section of the north-south coastline of China. Facing the opportunities and challenges of the 21st century, Shenzhen has set its long-term strategic objectives for social and economic development. In near future, Shenzhen is planned to become one of the international economic, financial and trade centers of the world.

Setting up a company in Shenzhen is a good choice for companies that are in computer software, IT, microelectronics and components, video and audio products, electromechanical integration, and key projects of light industry and energy.

The Wholly Foreign Owned Enterprise (WFOE) is a Limited liability company wholly owned by the foreign investor. The foreign company has sole responsibility for its profits and losses. Limited liability is recognized by the amount of registered capital injected into the business. It is required to register as a legal person who is restricted to certain businesses. The enterprise is able to implement strategies that effectively conform to the interests of the parent company abroad. Moreover, technology and know-how are given better protection.

To establish a WFOE in ShenZhen China, the project shall be examined and approved by the district authorities where the project is to be located. The foreign investor is required to entrust the authorized consultative bodies or agencies with the tasks of application and documents submission for approval..

Capital Contribution:

There is a minimum capital contribution required, known as registered capital, which varies according to the nature of business. The registered capital shall be matched with the actual business activities. There is NO real capital requirements since 2014.

Investor

The foreign investor may be a foreign company, enterprise, other economic organization, or a natural person.

(1) For a company/enterprise, the Certificate of Incorporation and Bank Reference Letter are required.

(2) For a natural person, the Identity Certificate and Bank Reference Letter are required.

-- the Certificate of Incorporation/Identity Certificate

--certified by the notary organ and the Chinese Embassy in your country

-- the Bank Reference Letter

-- issued by the bank in which foreign investor has a working or trading account and signed by an authorized bank officer

Process of Setup WFOE in China:

1. Reservation and Application of Company Name:

Prior to any of the following applications, the investor(s) should reserve a name for its prospective WFOE with ShenZhen Administration of Industry and Commerce (SAIC). SAIC requires that a proposed name and three other names be provided.

2. The Chinese name should be formatted as follows:

First word - company name; Second word - activity; Third word - location/name of town; Fourth word - company structure. The use of 'China' 'Sino' and 'International' are not permitted in the Chinese name unless very special permission is given, although they are permitted in the non-Chinese name.

3. Registration of Approval Certificate:

After the completion of Name Approval Notification, Approval letter and Approval Certificate are the next to register. At the time of application, Article of Association, Feasibility Study Report, Lease Agreement, etc. should be submitted to ShenZhen Municipal Commission of Commerce. The local Approval Authority will review all documentation and give instructions in accordance with the Company Law and local regulations. If all is up to standard, the authority is able to give its approval and issue the certificate within 10 to 15 working days upon receiving all the required documentation.

4. Business License and Organization Code Certificate:

Within 30 days after obtaining the approval certificate, the foreign investor will need to register and apply for a business license for the WFOE from the local SAIC. As part of this step, the foreign investor should submit similar documentation to the authority for approval and filing.

5. Once the business license is issued, the WFOE is deemed to be a legal person duly organized and existing under PRC laws and will have full operational rights to operate a business in China within the scope of its Business License.The organization code refer to the statutory code, the only and constant code identity given to every single organization, according to the compiling rules of national organization code. Application for Organization Code Certificate is purely a procedural step.

6 .Registration of Tax Registration Certificate:

Once your Organization Code registration Certificate is approved then you may proceed with applications to the local tax authority. At the same time, you should also apply for the company seal and legal representative seal from ShenZhen Municipal Police Bureau with the assistance of the authorized Carving Seal Agent.Together with Approval Certificate, Business License and other documents, the formal application form affixed with seals should be submitted to the authority for their examination and approval. Start from the second month after obtaining the Tax Registration Certificate, the WFOE is required to apply tax filling monthly / quarterly and inspection annually.

7. Other Certificates of WFOE:

-- Statistics Registration Certificate issued by Statistics Bureau;

-- Foreign Exchange Registration Certificate issued by State Administration of Foreign Exchange;

-- Financial Registration Certificate issued by Finance Bureau;

 -- Customs Registration Certificate issued by Customs Bureau.

8. Post Incorporation:

Having obtained approval from the tax and foreign exchange authorities, you are legally entitled to open Foreign Currency Capital Account and RMB Basic Account. Then you may proceed with capital injection, capital verification and certificates renewal.

9. Information and Documents Required:

--name and address of WFOE;

-- WFOE's office rental contract;

-- a written application for the establishment of the WFOE;

 -- the Feasibility Study Report covering items such as technological process, equipments, raw material supply, market survey, economic results, infrastructure facilities, expected profitability, etc;

-- the Articles of Association of the proposed WFOE;

-- a list containing the proposed chairman and the members of the WFOE board of directors and appointment letters;

 --- the Certificate of Incorporation of the WFOE investor;

-- the Bank Reference Letter of the WFOE investor;

-- other documents as may be required by the Approval Authority

After China's entry to WTO, most industries in China welcome foreign investment, WFOE setting up in China becomes the first option of foreign investment's entity structures instead of Rep Office setting up in China At the mean time, for tax purpose, effective licensing system etc more and more investors use Hong Kong as the holding company to invest China mainland, using this offshore company to hold their operations in China.

From 1st October 2016, China Ministry of Commerce has changed the foreign investment approval system into filing system. It means WFOE whose industry is not restricted type or prohibited type can directly start the business registration first and then complete the filling system on website of Ministry of Commerce. This change has greatly reduce the policy risk when foreign investor plans to start a WFOE in China.

Business set-up in China is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls

Since 2006, Tommy China Business Consulting has been focusing on consultingservices for our clients to invest in ShenZhen China. We are specialized in establishment of wholly foreign owned enterprises (WFOEs), setting up of offshore companies, trading services, tax minimization Assist in obtaining government approvals and certificates for running business, negotiate and draft various legal documents provide legal advice, negotiate government officer for Land acquisition

Advising on formation of WOFE and business structures ,managing and controlling WOFE in ShenZhen China, drafting privacy policies and structuring commercial transactions, TCBC will manage all aspects of incorporation to get you a business license in ShenZhen China.

Contact Tom Lee now for setting up your WFOES in shenzhen

Email: tomlee@tommyconsulting.com, tomlee_cn@163.com,
WhatSapp/Wechat/Cell Phone: +86 18926401128, Skype: tomleeli
Tel: 86-755-25809219,Fax: 86-755-83256658

 

ShenZhen Qianhai Pilot Free Trade Zone Offers Incubators Free Rent & Low Taxes,Shenzhen Qianhai Company Registration Business Setup Procedures

On April 27, 2015, China (Guangdong) Pilot Free Trade Zone Qianhai & Shekou Area of Shenzhen was initiated. As a crucial part of the Guangdong Pilot Free Trade Zone, the Qianhai & Shekou area is a main part of the economic cooperation between Shenzhen and Hong Kong, covering an area of 28.2 square kilometers and including Qianhai and Shekou. The zone can be divided into three industrial areas: Qianhai Finance Business District, which mainly focuses on developing finance, information services, technology services and other professional services; Shenzhen West Port Area that centers around Qianhai Bay Bonded Area and focuses on developing port logistics, international trade, supply chain management and high-end shipping services; Shekou Business District, which will develop Internet information services, technology services and cultural and creative industries.

 

The Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone – has opened a 15 square kilometer incubator hub for entrepreneurs from Hong Kong and overseas. The Zone itself has been billed as a Hong Kong-Shenzhen joint development, and to date has focused on attracting corporate financial services. HSBC, for example, have committed to the zone, as have Standard Chartered, the Bank of East Asia and China’s Commercial Bank, based on the zone’s ability to offer cross-border RMB loans. However, the Qianhai bankers and forex traders may soon find themselves rubbing elbows with T-shirted entrepreneurs aged 18 to 45 who are looking to start their businesses there.

 

The Shenzhen government has specifically targeted IT and promised that internet access will be better than is permitted elsewhere on the mainland. One-third of the land set aside for the entrepreneurs – known as the Shenzhen-Hong Kong Youth Innovation & Entrepreneur Hub – will be available to Hong Kong residents, the rest to foreign investors. Incentives for approved projects include one year of free rent and the second year at 50% for both residential and office space. Also, both individual income tax and corporate income tax rates in certain industries are set at 15 percent. Normal tax rates in China are 25 percent for corporate and up to 45 percent for individual income tax.

 

Meanwhile, a gold vault, which will facilitate gold as a commodity trading hub, will also opening in Qianhai, in March. The vault will be operated by the Chinese Gold and Silver Exchange Society and will allow for gold to be traded and supplied on-demand to Shenzhen’s jewellery factories. Sixty-eight gold trading firms are behind the scheme. Shenzhen manufacturers some 70 percent of all gold jewellery in China, and the gold facility in Qianhai is expected to attract international gold firms hoping to access the PRC market.

 

The preferential tax policies have already attracted over a 100 000 business to the Qianhai SEZ which are expected to generate 150 billion Yuan by 2020 as it transforms into a modern services centre and regional powerhouse

Low financing costs, low labor costs and high efficiency have enticed a growing number of enterprises to set up operations in the zone

 

Ok, so you’re convinced Qianhai company is for you. What are the requirements for setting up? Here’s a list:

Qianhai Company Forms

1. Qianhai company forms: WFOE, CJV, EJV, Domestic company;

2. Documents required for Qianhai company registration:

*Confirm the company name, business scope, registered capital and company shares;

*Passport or ID card copies of Legal representative, Executive director, General manager and Supervisor;

*One original Lawyer’s legalization or notarization which should be endorsed by local China Embassy or Consulate within 6 months (for foreign invested company);

*China company’s business license, company stamp and article of association (for JV)

*Online banking USB of Shareholders, Legal representative, Executive director, General manager and Supervisor (for Shenzhen domestic company).

 

Qianhai company registration and Qianhai regulations

1. Qianhai company name format: China government has a name format for anyone who wants to setup a company in China, the format is: City name + trade name + business scope+ limited. If using the province name or even using “China” instead of the city name, the name should be applied in the province authority or Beijing. And only Chinese company names are officially used, while English names are for reference only. Any names are subject to the approval of relevant authority. In Shenzhen, the company name should include the city name “Shenzhen” inside it and for those registered in Qianhai Free Trade Zone, the investors can choose either to add “Qianhai” into the company name or not.

 

2. Qianhai company registered address: Qianhai government provides the registered address for all companies registered in Qianhai Free Trade Zone. Before applying for Business License, the company is required to apply for the Qianhai registered address from Qianhai government. After the application is approved, the investor can sign a lease agreement with the Qianhai government. The valid period for the address is for one year and the investor is supposed to apply for another year’s extension before the lease agreement expires.

 

3. Qianhai company registered capital: Shenzhen Qianhai Free Trade Zone authority has different requirement about the amount of registered capital from other areas in Shenzhen. In other area of Shenzhen, investors are free to decide the amount of registered capital while in Qianhai Free Trade Zone only investors from Hong Kong, including both HK citizens and HK companies, are free to decide the amount of registered capital. Investors not from Hong Kong are required to set up the company in Qianhai with the minimum registered capital of RMB 5 million. And the capital, like other areas in Shenzhen, could be paid up within 30 years from the date of issue of Business License.

 

4. Qianhai company business scope: One of the most important issues is to define the business activities of the company. Business scope is narrowly defined based on many factors, such as trade names, registered capital and business scope. A Shenzhen Qianhai company can only conduct business within its approved business scope on the business license. Amending the business scope will need further application and approval. Qianhai authority encourages the business scope from logistics, technology, services and trading, but disapprove manufacturing company to be registered in Qianhai Free Trade Zone.

 

Shenzhen Qianhai company registration procedures

Step1: Let clients fill out the application form (sign the agreement);

Step2: Confirm the company name, business scope, registered capital and company shares;

Step3: Check the required documents for the clients;

Step4: Pay the services;

Step5: Prepare for the statutory documents for the investors to sign personally;

Step6: Forward documents to related government departments;

Step7: Keep clients informed of processing.

Step8: Finish processing in 15-35 working days;

Step9: Collect the documents and items and settle the balance if any.

 

We are ready to help you register your Qianhai company quickly and easily.

 

 

Contact Tom Lee now for setting up your Qianhai company

Email: tomlee@tommyconsulting.com, tomlee_cn@163.com,
WhatSapp/Wechat/Cell Phone: +86 18926401128, Skype: tomleeli
Tel: 86-755-25809219,Fax: 86-755-83256658

Five Good Reasons to Set Up Business in Hong Kong,Hong Kong Company Incorporation Services, HK Company Registration

“Hong Kong is a regional base for expansion across Asia. Stable, business-friendly and cosmopolitan”, is how Hong Kong’s business promotion organisation InvestHK promotes the city. It wants Hong Kong to be seen as a Chinese hub, but also as a gateway to Asia’s business environment. Indeed, there are about 1,000 daily flights between Hong Kong and the rest of the world. What else is there?

1.   Great for startups – Hong Kong offers a good climate for startups. A recent survey conducted by HKInvest showed that the number of new startups has risen sharply in 2014. 1,558 new startups were registered, up 46 per cent compared to a similar poll done a year ago. Top sectors included Information, Computer and Technology taking up 19 per cent, Hardware (IoT, prototypes and wearables) accounting for 14 per cent (compared to only five per cent a year ago) and E-commerce/Supply Chain Management and Professional or Consultancy Services, each taking up 10 per cent.

2.   Location - Hong Kong offers easy access – commercially and geographically – to Mainland China business opportunities. The Pearl River Delta (PRD) region is immediately to the north of Hong Kong and business people commute regularly and easily between the two.

3.   Government support – Hong Kong’s government wants your business and is prepared to offer incentives, with programmes designed to help overseas and local SMEs set up in Hong Kong. Part of Hong Kong’s appeal is built on political stability, the rule of law, free market principles, free flow of information, and English as the language of business. More pros: there are no foreign ownership restrictions and HK offers free movement of capital, talent, goods and information and a fully convertible Hong Kong dollar separate from the Renminbi (RMB).

4.   Tax is a breeze - According to the 2015 Paying Taxes study of 189 economies, Hong Kong has one of the most tax-friendly economies in the world. There is a simple tax regime, profits tax is capped at 16.5 per cent, salaries tax is a maximum of 15 per cent, and property tax is 15 percent. Hong Kong has no sales tax or VAT, no withholding tax, no capital gains tax, no tax on dividends and no estate tax.

5.   Free trade - For the past 21 years Hong Kong has been ranked as the ‘World’s Freest Economy’ by the Heritage Foundation/Wall Street Journal. Hong Kong scored particularly well on business, trade, financial and labor freedoms. Hong Kong’s natural deep water port and trading history has made the city one of the world’s major international sea and air cargo hubs, accounting for almost a third of exports in and out of Mainland China. Hong Kong also handled nearly 4.4 million tonnes of airfreight in 2014.

6.   The right people - Recruiting well-educated local staff is easy. Almost all business professionals speak excellent English. The Hong Kong University was ranked the second in Asia in the 2014-15 QS World University Rankings. Hong Kong’s business schools are also world-renowned. Hong Kong’s immigration policies are designed to attract overseas professionals, talent and investors. Policies are family friendly and expatriate employees can normally bring their spouse and dependent children.

Hong Kong Company usually been used as a Special Purpose vehicle (SPV) to invest Mainland China. Hong Kong is one of the quickest locations to Incorporate a business. Although a HK company is not a legal entity in Mainland China (MainlandChina and Hong Kong, See Wiki 1 country, 2 systems), lots foreign investors, especially investors from Europe and North America still chose to setting up a Hong Kong company as SPV to invest China

Requirements of Hong Kong Company Formation
If the shareholder is a corporation, need to provide Business Registration certificate copy.
Company Secretary must be ordinarily reside in Hong Kong or Hong Kong Limited Company, like UWS, to handle on-going statutory compliance matters.
Registered address of the Company must be located in Hong Kong
There shall be at least one shareholder and natural director over 18 years old, Shareholder and director can be the same person and can be of any nationality
Processing Times of Hong Kong Company Formation• Online applications for Hong Kong Company Incorporation can normally be processed within a day
Paper applications will take 5 working days to get the Certificate of Incorporation and Business Registration Certificate.
Required Information for Hong Kong Company Formation
Proposed company name (please provide at least 2-3 choices). Company Name must be unique and can be in English or Chinese or both.
Passport copy and residential address (in English) of shareholders and assigned Director.
Amount of share capital, and percentage of shareholdings; if there is more than one shareholder. HK$10,000 divided into 10,000 shares of HK$1 each is the most common and Minimum subscribed share capital is HK$1

Hong Kong Company Formation Procedures:
Step 1
Client engages the services of Uni-World Services.
Full information required is sent to us by fax or email.
Step 2
Payment receipt of company formation service fees to be submitted.
Step 3
Necessary documents and forms will be sent to client for shareholder’s and director’s signature.
Step 4
Upon the receipt of the signed documents, the application for the Certificate of Incorporation (CI) and Business Registration Certificate (BR) will be submitted to the Company Registry of Hong Kong. (The Certificate of Incorporation will be issued within 5 working days.)
Step 5
The order for making company seal & chop will be placed.
Step 6
Open bank account
The official establishment of the company is finally completed.

Hong Kong Company Secretarial Service
Under the Companies Ordinance (Cap. 32) of the Laws of Hong Kong, a limited company incorporated in Hong Kong should appoint a company secretary, to perform the legal liability of the company, which includes declaration of relevant organisation structure, changes of shareholders and directors to the Companies Registry, as well as contemplation of the agenda of company meetings for Board of Directors, preparation of annual general meetings of shareholders and provision of professional advisory service and advice on relevant statutory ordinances.

Our Services Include:
Preparing and keeping statutory records, such as register of shareholders and register of directors, etc.
Arranging and attending meetings of directors and shareholders, and preparing minutes of meetings
Preparing and submitting statutory documents, including annual return form
Preparing and submitting application for business registration certificate
Assisting in opening bank account
Assisting in applying for Hong Kong work visa
Deregistering the company and suspending applications for activities
Providing relevant advice on company liquidation and bankruptcy
Hong Kong Company Bank Accounts
After incorporating company, you may consider to open bank account or not depending on your company’s actual circumstances.

Local Accounts Documents Required:
Director(s)’s Passport, address proof
Business Registration Certificate
Certificate of Incorporation
Statutory record
Common Seal and stamp
Shareholder(s)’s passport and address proof
Relevant business proof are *Essential*
• Business Plan and/or Product Brochure
• Buyer and Supplier’s contract
• Shipping documents e.g. Packing List, Commercial Invoice and Bills of Lading etc.
• Company Business Card

Director(s) should go to the bank in person to sign the bank documents:
Hong Kong banks generally require the directors (at least 2 if more than 2) to visit the bank in person to open an account. Account signatories or a company director (if from Mainland China you must hold a Chinese passport or travel permit) should bring company documents and related materials as mentioned above to open an account in Hong Kong or Macau.
UWS Banking Services:
Communicate with you in preparing documents required
Review all supportive documents
Understand your business mode
Submit required documents to banker and arranging bank meeting.
Advice on answering bank interview questions shortly before your meeting with bank.
Accompany you to bank for opening bank account.
Follow up with bank closely.

We are experts in Hong Kong company registration, and will get your Hong Kong company up and running with the minimum of hassle for you. You do not even need to be in Hong Kong for us to do this for you

Contact Tom Lee now for setting up your Hong Kong company

Email: tomlee@tommyconsulting.com, tomlee_cn@163.com,
WhatSapp/Wechat/Cell Phone: +86 18926401128, Skype: tomleeli
Tel: 86-755-25809219,Fax: 86-755-83256658

Set Up a Representative Office in Shenzhen China, Establishing Representative Office (RO) in Shenzhen

Shenzhen is the second largest city in Guangdong province, a regional manufacturing and financial hub and one of the richest cities in China. The city, originally a village north of Hong Kong, was first developed as a special economic zone when economic reforms were introduced in the late 1970s. After over 30 years of sprawling, it has become one of China's top four first-tier cities along with Shanghai, Beijing and Guangzhou. With a population of over 20 million, the city's GDP grew 10% to RMB1.3 trillion in 2012. The Shenzhen Stock Exchanges, one of the only two on the mainland, focuses on small and midsized companies as compared to Shanghai's where larger state-owned companies are traded. With sound infrastructure and easily recruited many talented personnel in Shenzhen, Foreign company can take this advantage to set up company in Shenzhen as china market entry strategies

 

 

When investors have plans on establishing representative office in Shenzhen, it is better for them to acquire more information in order to run a successful business in Shenzhen. Setting up a representative office is the most inexpensive entry form for foreign enterprises to enter the Chinese market. And about 20% of investing clients have chosen Representative Office as their Shenzhen business entity since setting up a representative office is cost efficient and it requires no capital investment. A representative office basically is to serve as a liaison office between a foreign company and its business partners in Shenzhen, and to coordinate the parent enterprise activities in Shenzhen (travel arrangements, promotion etc.). 

 

Representative offices are applicable for many industries: trading, shipping, consulting, etc. The Chinese government has a name format for anyone who wants to setup a representative office (RO) in China, the format is: country (area) + parent company name + Shenzhen Representative Office.

 

Shenzhen Representative Office Setup-Procedures
Preparing all the needed documents→ fill out the application form→ sign the agreement with TCBC→ pay for the services→ submit all the needed documents→ name reservation→ apply for the business license and work card→ go to the public security bureau for stamp-make→ apply for Organization Code License & card→ apply for Setup license of the Local & National Taxation Bureau.

 

An RO has no legal personality, meaning it does not possess the capacity for civil rights and conduct, cannot independently assume civil liability, and is limited in its hiring ability. Chinese staff working for an RO, although not limited in number, must be employed through a human resources agency that will sign a contract with the RO on the one hand and with the Chinese staff on the other in order to ensure social security and housing fund contributions are paid on a regular basis. No more than four foreign employees can be hired per RO. Foreign staff working for ROs should have an employment relationship with the parent company abroad, and any disputes should be settled under the laws of that country

 

ROs are usually taxed on gross expenses with the overall tax burden around 11.75 percent of total monthly expenses; however, these rates may be increased by the relevant tax bureau according to the industry. If the chief representative is a foreign national, whether they stay in China or not, they shall be subject to individual tax based on the income derived from the RO. 

Set Up a Representative Office in Shenzhen is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls

 

Contact Tom Lee now for setting up Representative Office in shenzhen

Email: tomlee@tommyconsulting.com, tomlee_cn@163.com,
WhatSapp/Wechat/Cell Phone: +86 18926401128, Skype: tomleeli
Tel: 86-755-25809219,Fax: 86-755-83256658