The representative offices of foreign enterprises are also called resident offices of foreign enterprises in China. A representative office is an office established by a company to conduct marketing and other non-transactional operations, generally in a foreign country where a branch office or subsidiary is not warranted. Representative offices are generally easier to establish than a branch or subsidiary, as they are not used for actual "business" and therefore there is less incentive for them to be regulated.
Business Scope of Representative Offices in China
The business scope of the representative office shall be indicated in the documents submitted to the registration department at the beginning, and the business scope shall be prescribed in the registration certificate of the resident office of a foreign enterprise after confirmed by the administrative departments for industry and commerce (the business scope which involves any certain special industry should require administrative examination and approval).
The foreign enterprise’s resident office can only engage in activities within its business scope. Generally, the representative office can only engage in non-profit activities related to the foreign enterprise’s business inside China, such as liaison, product promotion, market research, and technology exchanges.
However, if the bilateral treaty signed by China and the country where the foreign enterprise is incorporated specially stipulates that the representative office may engage in profit-making activities in China, those provisions shall prevail.
Though some relevant government regulations provide that the representative office is not allowed to engage in direct profit-making activities, it does not mean that the representative office can not conduct any economic activities. The representative office is entitled to undertake economic activities and sign the economic contracts necessary to maintain its own daily operation.
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