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A branch office is an outlet of a company or, more generally, an organization that – unlike a subsidiary – does not constitute a separate legal entity, while being physically separated from the organization's main office. There are three meaning of branch office for a foreign entrepreneur: a branch office of an overseas company, a representative office in China, a branch office of a company in China. It’s of great significance to understand the differences in between.
Setting up a branch office of an overseas company in Shanghai
Most foreign enterprise choose to set up a WOFE in Shanghai, since the city represents the center of commerce and finance. WOFE in some way is indeed the branch office of an overseas company in China. In this regard, foreign entrepreneurs could fully control the enterprise and make fully independent management choices regarding all business-related decisions and bear limited liability restricted to the registered capital.
Incorporating a representative office in Shanghai.
The representative offices of foreign enterprises can only engage in indirect business activities within the territory of China. For example, product promotion, market research, technical communication, and other business activities, but the representative office can not constitute as a legal entity.
RO is also a favorable option for many foreign entrepreneurs especially when they just tapping into the Chinese market. However, bear in mind that a representative office is not recommended as a path to a WFOE if your business is characterized as profit-making nature. Because you cannot just switch a representative office to a WFOE in China, a rep office need to be closed down first, then a new WFOE can be established. On the other hand, it is quite expensive and time-consuming to close one representative office.
Setting up a branch office of a Chinese company in Shanghai.
If you already established a company(WOFE) in China, then you could form a branch office of the existing China company in Shanghai.
The registration of branch office of a China WFOE, for instance, requires the legitimate documents of the WFOE in China. The branch office could choose not to do independent accounting to save management costs.
Please feel free to contact us for setting up a branch office in Shanghai and other services in your business operation, Tannet are glad to offer our professional services.
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