As located at the geometrical center of China,
Chongqing has become a transportation hub on the upper reaches of Yangtze
River. Chongqing extends its highway in all directions; Chongqing Jiangbei
International Airport, one of the top ten airports in China, and the largest
port on the upper reaches of the Yangtze River are both located in Chongqing.
The completed Three Gorges Project improves the navigation capacity. Through
the golden waterway, Chongqing is directly linked to the rivers and seas.
Once an old industrial base, Chongqing has
rapidly emerged as one of the fastest growing and fastest urbanising cities in
China and, according to some reports, the world. Located in China’s west, the
municipality of Chongqing boasts a population of over 30 million (one of the
largest in China) and a GDP growth rate of 11% year on year (also one of the
fastest of China). It is also the centre of China’s ‘Go West’ Strategy which
has created a unique business and investment environment for foreign companies.
Despite its profile, Chongqing still remains largely unknown to the West who
often look to Beijing and Shanghai when entering the China market. For foreign
companies wanting to launch into the China market, we believe that Chongqing
should be there next destination.
When
investors have plans on establishing representative office in Chongqing, it is
better for them to acquire more information in order to run a successful
business in Chongqing 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 Chongqing China primarily requires 4 stages and
this entire process can take up till 4-5 months time.
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 practice 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.
term commitment to the China 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 Chongqing is a big project by itself, which
requires financial and time commitments, business management knowledge and
China expertise. Identifying a
competent agent to manage thecomplex 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
for our clients to invest in Chongqing. We offer a range of company formation
services including helping you to set up:
-Wholly Foreign Owned Enterprises (WFOE )
-Representative Offices
-Joint Ventures (Equity/Co-operative)
-Foreign Invested Partnership Enterprises (FIPE)
-Hong Kong Holding Company.
-Representative Offices
-Joint Ventures (Equity/Co-operative)
-Foreign Invested Partnership Enterprises (FIPE)
-Hong Kong Holding Company.
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