In 1820, President Monroe cast his eyes beyond the United States and saw the emerging new global behemoths, from Greek to Brazil, but there was something bigger, way larger, that was simmering: the rise of China. Close to two hundred years later, precisely in 1979, China adopted economic reforms that have catapulted it to the second-largest economy after the United States. This growth is expected to continue, and you can take advantage of it by opening a representative office in China.
When considering opening a foreign company in China, what runs through the mind of many foreigners is a WFOE. However, there are other options that you can use, and one of the best options is a representative office (RO). Keep reading as we dig deeper to reveal the special benefits that come with registering a representative office in China.
What is a Representative Office in China?
This is one of the easiest types of companies to form in China. As the name suggests, a representative office (RO) is considered an excellent way to promptly jump into the Chinese market. To open an RO in China, you need to have another company that is already running back home. In addition, the parent firm must be a limited liability company and have also been in operation for at least two years.
Although way simpler to register compared to joint ventures or WFOEs, the process is still pretty complex for many investors. For example, you still have to work with different departments in China and prepare loads of documents. This is why you should work with an agency of experts.
Special Advantages of Opening a Representative Office in China
Here are some of the most notable benefits of opening and running a representative office (RO) in China:
- A Representative Office is Faster to Register in China
The process of registering a company in China is usually lengthy and complex, but you can ease this by selecting a representative office. As a branch of the parent company, you will not need to craft a complex structure for the RO. The scope, such as research or marketing, is also pretty simplistic.
- Awesome for Early Market Exploration
For most investors, China is an exciting market, but this notion can be pretty misleading. Different regions, cities, and industries share diverse characteristics. A representative office (RO) allows you to study the markets and make informed decisions. For example, the company can help you to answer questions such as, “is it a good idea to open a company in Shanghai or Beijing?” and “which regions come with better tax incentives?”
- Excellent Pick when You Only Need Simple Presence
If you want to only have a simple presence in China, perhaps to follow a specific issue or search for a partner, opening a representative office (RO) can be an excellent idea. It will work particularly well when the targeted activity is not profit-based.
- You Have Absolute Control through Mother Company
As we indicated already, a representative office (RO) is considered an extension of the parent company back home. Therefore, you will have greater control than working with a joint venture (JV). However, you must appreciate that these are only non-profit-based actions.
As you can see, there are so many benefits that come with opening a representative office in China. Once you have made up your mind about opening an RO, the best method is to use an agency of experts. One of the best agencies of experts is Primasia. They have experts you can count on not just for representative office registration in China but also for other activities such as payroll management and accounting.
You can never go wrong when working with an agency of experts!
