A liaison office in China is known as a representative office (RO) directed to foreigners who want to establish a business presence in the country without having to operate as a WFOE in China, as a subsidiary or a branch. The registration of a liaison office in China can be made with complete assistance offered by our team of company incorporation agents in China who can also offer support for any type of entity you want to register.
Representative offices in China are a common form of foreign investment in China.
When setting up a business in China, a liaison office is the main connection to the head office, it represents the official presence of the company in China.
One of the main advantages of setting up a liaison office in China is that it allows foreign companies to have a presence without having to open a wholly-owned foreign enterprise in China (WOFE China). This is advantageous from a financial as well as time-related perspective.
The liaison office in China has certain limitations as well:
- they can only conduct activities related to the head office;
- they cannot engage in commercial activities on their own;
- cannot sign contracts as the parent company.
Their activities revolve mainly around the promotion of the home company.
If you would like to find out more details related to the advantages and limitations of starting a business in China or opening a representative office there, we encourage you to contact one of our specialists in company formation in China.
Table of Contents
What are the attributes of a liaison office in China?
The connection between the parent company from abroad and the registered business in China can be established through a liaison office or a representative office in China. It is important to know that such a structure has no legal personality and it is subject to varied conditions:
|Deals with financial operations||NO|
|Can issue invoices||NO|
|Can sign contracts||NO|
|Can assume civil liability||NO|
|Needs a registered agent||YES|
|Can perform marketing activities||YES|
|Must submit the annual financial statements||YES|
If you consider that a liaison office is a proper choice to establish a business presence on the Chinese market, you can talk to our company formation specialists in China.
The general functions of a representative office in China include:
- Market research: gathering information and potential leads;
- Promotion: promoting the parent company’s products or services to Chinese investors or clients;
- Communication: managing communication with the parent company;
- Events participation: participation in trade fairs in order to promote products or the services of the head company
- Administrative support for the company they represent.
What are the tax requirements for a liaison office in China?
The representative offices in China need to file the annual report with information about the foreign company, the payment balance, and about ongoing business activities. Moreover, liaison offices in China are levied for gross costs, and the tax rate in this matter is set at 11.75% of the monthly expenses, in accordance with the business sector in which these are registered.
Would you like to open a WFOE in China? We advise you to contact our local agents with experience in this field. The preparation of the necessary documents, the registration for the payment of taxes, and the submission of the documents for obtaining the business license come to our attention. We mention that the process of registering the desired company should not exceed more than 3 months and there is no obligation to have more than one shareholder. Contact us if you want to open a company in cities such as Shanghai, Tianjin, Beijing, and Shenzhen.
What are the conditions for foreign employees of a liaison office in China?
The specific conditions for the foreign employees of a liaison office in China can vary and depend on the internal policy of the parent company as well.
As a general condition, foreign staff should obtain certain documents. The first one is a work permit and they can apply for it directly through the liaison office. They will also have to obtain a residency permit. And before working in China they have to go through a medical check-up to prove that they are fit for work.
Furthermore, foreign employees need to have a certain set of skills as well. One of the requirements is having a conversational Chinese language level. Also, a basic understanding of Chinese laws and regulations could be very useful as well as a complete understanding of the limitations of a Representative Office in China.
Because these conditions can vary a lot, we encourage you to contact our specialists in company formation in China for a detailed and personalized perspective of the situation. We can also give you details about virtual offices.
It is good to know that the representative offices in China cannot hire more than 4 foreign employees. Likewise, such employees must have business relations with the parent company from abroad. Here is an infographic that explains how you can set up a liaison office in China:
The registration of a liaison office in China
The formalities for registering a liaison office in China are not complex, however, the support and guidance of a company formation agent in China can be quite helpful in terms of documents and many more. The Certificate of Incorporation of a company in China, a document stating the activities of a liaison office in China, and the application form with details about the foreign company and its owners are among the necessary documents for registering and opening a liaison office or a representative office in China. Your business presence in China can start with the help of a liaison office before you consider establishing the company with a traditional office. In any case, one of our agents can assist you throughout the registration process of a company in China, so feel free to address your inquiries to us.
The process of registering a liaison office in China can differ from one situation to another, but the general steps are:
- Obtain approval from the Ministry of Commerce
- Register the Representative Office in China
- Obtain a business license
- Obtain an organization code certificate
- Obtain approval for the appointment of the liaison legal representative
- Obtain a seal for the liaison office from the local public security bureau.
If you need help navigating the legal process, our specialists in company incorporation in China can offer you complete assistance.
What kind of companies can open liaison offices in China?
- The entities that can open a business in China under the form of a Representative Office include:
- foreign companies;
Generally speaking, it is a great opportunity for legal entities that plan on conducting non-profit activities in China, that include: market research, product promotion, prospecting leads, and using the liaison office in China as a communication bridge between the conglomerate or between the parent company and the Chinese market.
The functions of a liaison office in China
The attributes and the purposes of a liaison office in China are quite clear and foreign investors know from the start about the type of activities and operations that can develop with the help of such a structure. For instance, a representative office in China needs a registered agent with a residency in China before developing any activities. Marketing strategies, advertising, and promotional activities are the only operations of a liaison or representative office in China. Because such an entity cannot have financial activities and therefore cannot act like a normal business structure, the liaison office cannot issue invoices or sign contracts. A representative office in China can be the proper business choice for small or medium entrepreneurs from abroad who want to test the Chinese market before acting as an economic operator. Feel free to talk to our consultants and find out more about how to set up a liaison office or a WFOE in China.
A company from abroad that needs to be represented in China can register a liaison office. This kind of representative office develops and preserves the connection between the foreign company and the potential customers and collaborators in China. All the advertising and marketing operations are normally agreed upon by the foreign business that has a representative agent in China. Such a representative must act in the best interest of the foreign enterprise, looking for varied marketing and promotional methods in order to create a company image and to contact different kinds of clients. Usually, the next step in business in China is to set up a company with a traditional office, if entrepreneurs decide that China is a good business destination for their operations.
FAQ about the liaison office
1. Is a liaison office the same as a representative office?
Yes, a liaison office can act as a representative office established by a foreign company in China.
2. What can I do with a liaison office in China?
If you would like to develop marketing and advertising activities in China and detect the proper business sector for your operations, a liaison office can be a great choice. You can get in touch with possible clients and collaborators with an RO in China.
3. Is it hard to register a liaison office in China?
No, there is no need to think of harsh formalities for liaison offices in China. The entire procedure can be handled by one of our company formation agents in China who can also act as a representative office for your liaison office.
4. What kind of companies can open liaison offices in China?
Companies with activities in the manufacturing sector, agriculture, medicine, tourism, engineering, or IT can easily set up liaison offices in China. A complete analysis of the Chinese market is recommended before establishing a traditional office in China.
5. Are there any taxes for liaison offices in China?
11.75% is the tax rate imposed on the monthly expenses of a liaison office in China. An annual report is also needed.
Investments in China
China has a powerful economy and it is one of the most important business players in the world. Large companies have operational branches and subsidiaries in this country, taking advantage of a wide range of business opportunities. Here are some interesting numbers about the economy and business in China:
- China ranks 31st out of 190 economies in the world, as stated by the 2020 Doing Business report;
- Around USD 1,627,000 million was the total FDI stock for China in 2018;
- 871 is the number of greenfield investments in China registered in 2018;
- Singapore, the USA, the Cayman Islands, and the Netherlands are China’s main investors.
If you want to set up a liaison office in China or if you want to register a company in China, we suggest you contact our team of company incorporation agents in China at any time.