If a foreign company plans to enter or expand its presence in the Chinese market, it may find it necessary to maintain a permanent office in China in order to reach potential suppliers and customers in the country as well as to show its commitment to the Chinese market and its sincerity in negotiations with Chinese trading partners. A representative office (RO) may be the ideal way for the company – at a low cost.
A representative office is not a Chinese legal entity but only represents the foreign company. Therefore, direct business activities from which earnings or profits may arise is not permitted. On the other hand, no minimum capital is required.
The business operations of a RO is limited as it is only representing the foreign company. However it is permitted to: