New regulation for representative office establishment and renewal in China

New regulation for representative office establishment and renewal in China

The new regulation regarding the R.O has brought great influences to those who intend to sourcing and do business in China by setting up a new company overseas/hk. Now the overseas parent company or the HK company must provide the certification from China consulate or embassy or HK lawyer authorized by Justice Ministry of China to show that the parent company has been operated two years at least. While in the past, any registred no matter how long the history is can set up a R.O in china and the representatives are allowed to get the resident permit. The direct influence is that those investors without parent companies or their companies are less than 2 years old cannot choose to set up the RO which doesnt require the investment fund in china. Therefore what they can do?

1.The solution is to buy a shell company which is 2 years old at least & get the certification from china embassy or lawyer from hk

2. register a WFOE (Wholly Foreign Owned Enterprise), which requires investment fund

a. consulting or management co. ltd requires USD120,000.00

b. trading company requires USD160,000.00

Even though, the immigration office has released new regulation to strengthen the managment to foreigners who want to apply resident visa from China. The new changes are:

a. the RO representatives who apply resident permit need provide the no-crime certification from China embassy to that country

b.the number of representatives who have right to apply resident permit is limited from only one to three depending on the nationalities.

From 2010, the Chinese gvernment has cancelled the special previlieged treatment to WFOE. It seems that more challenges have come to overseas investors.

With the inflation, the labor costs in China have been raised. The foreign companies need raise the salary levels and social insurances benefits. As a result, the product costs are higher.

For OEM, it may be the disadvantage. While China has a huge growing market, especially there is big demand of european products. It is definitely a good trial to discover the local market for overseas products. Wine business is a good example.

Romeo Lau & Co.Guangzhou office contributes above.

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