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Investor's Guide - Representative Office
The representative office is often the
first type of business vehicle
established by a company entering China. There are many reasons for
establishing a representative office. If a company has identified a
local joint venture partner in the Shanghai area and is beginning the negotiation
process, the company may elect to put a team on the ground in Shanghai to arrange
for visas, hire staff, and perform other administrative tasks necessary for
the eventual establishment of the joint venture. Companies might also
develop closer relationships for future business. Another common
purpose of the representative office is to establish contact with sales
and distribution networks set-up in the area.
Representative offices under Chinese laws
and regulations serve as liaison offices. This restricts a company from
engaging in certain activities. Most importantly, representative
offices are restricted from participating in business such as signing
sales contracts and collecting on invoices.
Companies establishing representative
offices are required to have a Chinese state-run company or consulting
company sponsor them throughout the process of applying to and
registering with SMERT.
Click HERE for information about
procedures for establishing a rep office
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