Local Variations on RO Incorporation Procedures Emerging

January 26, 2010 Posted by China Briefing Reading Time: 2 minutes

Jan. 26 – Since the release of new incorporation rules for representative offices earlier this month, we have been getting reports on variations in how these new regulations are being implemented at the local level.

In Guangzhou, it was reported that the total number foreign representatives at an RO cannot exceed three. This differs from the State Administration for Industry and Commerce rules which set the limit on foreign representatives at four. Inquiries to the local AIC in Guangzhou confirmed this practice. ROs in other cities including Beijing, Shanghai, Shenzhen and Hangzhou are allowed to have four as regulated by the SAIC circular.

We have also encountered several recent issues where the chief representatives of newly established ROs has been asked to complete a Chinese language business exam and then apply as a “foreign expert” as part of the application procedure for the chief representative. While the request to provide a “no criminal record certificate” is often now asked for, we are not aware of any regulations that require the taking and passing of Chinese business language courses for chief representatives of foreign enterprises in China.

Accordingly, such requests should be dealt with a degree of interest in establishing the regulatory position that necessitates taking such a course. It may be a method to “sell on” additional, but not mandatory, “services;” however it should be noted that refusal may also result in application delays. Affected individuals are asked to contact Dezan Shira & Associates so we may monitor this new request and if necessary take the matter up with the pertinent authorities for clarification.

Richard Hoffmann is the senior legal associate for Dezan Shira & Associates in Beijing. Please contact the firm if you require assistance establishing a representative office or need clarification on chief representative or legally responsible person applications for your company in China. The firm provides legal establishment, administration and tax advice to companies and individuals in China.

China Briefing has also produced the technical guide, “Setting Up Representative Offices in China.” Written by the business advisory and corporate accounting teams at Dezan Shira & Associates, it is now in its third edition and may be purchased from our bookstore in both hard copy and PDF versions.