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When investors have plans on
setting up representative office in Quanzhou, it is better for them to acquire
more information in order to run a successful business before entering Quanzhou.
Quanzhou Representative Office (RO) Formation – introduction of
Quanzhou Representative Office (RO) Formation
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 Quanzhou 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 Quanzhou, and to coordinate the parent enterprise
activities in Quanzhou (travel arrangements, promotion etc.). Representative
offices are applicable for many industries: trading, shipping, consulting, etc.
Quanzhou Representative Office (RO) Formation – Advantages of Quanzhou
Representative Office (RO) Formation
Using a representative office as
Quanzhou entry form has the following advantages:
1. Affordable: no paid capital
required, government and service fees are usually lower than what is needed for
WFOEs.
2. Quicker registration process
(usually within one month or so), and easy to control than others business type
in human resources or taxes issues
3. The quickest, relatively
inexpensive and easy to set up.
Quanzhou Representative Office (RO) Formation – The functions of
Quanzhou Representative Office (RO) Formation
A Representative Office in
Quanzhou may only engage in non-profit making activities, it can carry out the
following functions:
1. It can handle market research,
sourcing, project investigation, quality control for parent company, liaison
with customers and suppliers
2. It cannot enter into
purchase/sales contracts and receive payment for services, issue invoices.
3. A RO can open bank accounts and
employ staff for above- mentioned purposes.
4. Apply for work permit and
residence permit.
5. A RO is still subject to tax
liability, so monthly tax return should be carried out regularly.
6. If a RO is set up in Shanghai,
it is qualified to get a car without entrance tax.
Establishing Representative Office (RO) in Quanzhou – More Tips for
Quanzhou Representative Setup
(1) Pick the right entity
when you are setting up business in Quanzhou.
For certain activities and for
certain company, a Representative Office (RO) will be the right choice, for
other cases this choice might be a waste of time and money, as the purpose of
an RO is quite clear but very limited.
Why? Because you cannot directly
change the status of an RO into a WFOE in the future if you want to really get
your feet into Quanzhou and thus you need to register the WFOE separately and
close the RO! This implies that you should have a clear plan of what you want
to accomplish when setting up a business in Quanzhou. The set up process,
starting from collecting all necessary documents to opening the bank account at
the end, will take between eight to twelve weeks. Please consider that all ROs
have the same limited business scope, that is: “engage in non-profit activities
related to its parent office”.
(2) Analysis
your company market and allocate your target customers carefully.
Usually an RO is used as a basis
for doing market research within Quanzhou and other not for profit seeking
activities like e.g. meeting and researching / acquiring suppliers and
potential customers. It is thus the easiest way to officially step into the
Chinese market but also a quite efficient one, if you just want to improve
supplier or customer relations quickly. Of course there are some disadvantages
coming with it. As you can imagine there are certain activities, which you will
not be allowed to do and thus create a trade-off between quick and cheap market
entry versus limited commercial activity options. In the following chart you
can see the opportunities you will have after setting up an RO but also some
limitations of a Representative Office.
Tannet Malaysia is an international consultant firm based in Hong Kong, Shenzhen. We have over 10 branches located in China which we believe Tannet will be your best choice for your ASIA investment. We provide one stop business solution from pre-setting up preparation to incorporation, management to operation, market strategics and brand protection and etc. Kindly contact us for more information on our other services if you are interested!
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