Set Up a Representative Office in Chengdu China, Establishing Representative Office (RO) in Chengdu

Chengdu is the capital of the Sichuan province and is situated on the Western edge of the Sichuan Basin. This capital city serves as the economic, financial and commercial center of Southwest China. More than 15 million people live in Chengdu. The province of Sichuan is known to tourists for its spicy food. Chengdu is famous for their cute habitants: The Panda. Economically, it is ranked as the 15th most competitive city in China. The ranking will probably move up quickly, as experts estimate that Chengdu will soon be upgraded from a Tier 2 to Tier 1 city. The growth which makes the Tier upgrade possible, is fueled by infrastructure and connectivity investments like the OBOR initiative and the Chengdu – Poland railway connection.

  

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Chengdu Investment Guide 2018

When investors have plans on establishing representative office in Chengdu , it is better for them to acquire more information in order to run a successful business in Chengdu . Setting up a representative office is the most inexpensive entry form for foreign enterprises to enter the Chinese market. And about 20% of investing clients have chosen Representative Office as their Chengdu business entity since setting up a representative office is cost efficient and it requires no capital investment. A representative office basically is to serve as a liaison office between a foreign company and its business partners in Chengdu , and to coordinate the parent enterprise activities in Chengdu  (travel arrangements, promotion etc.). 

Representative offices are applicable for many industries: trading, shipping, consulting, etc. The Chinese government has a name format for anyone who wants to setup a representative office (RO) in China, the format is: country (area) + parent company name +Chengdu  Representative Office.

Chengdu Representative Office Setup-Procedures
Preparing all the needed documents→ fill out the application form→ sign the agreement with TCBC→ pay for the services→ submit all the needed documents→ name reservation→ apply for the business license and work card→ go to the public security bureau for stamp-make→ apply for Organization Code License & card→ apply for Setup license of the Local & National Taxation Bureau.

An RO has no legal personality, meaning it does not possess the capacity for civil rights and conduct, cannot independently assume civil liability, and is limited in its hiring ability. Chinese staff working for an RO, although not limited in number, must be employed through a human resources agency that will sign a contract with the RO on the one hand and with the Chinese staff on the other in order to ensure social security and housing fund contributions are paid on a regular basis. No more than four foreign employees can be hired per RO. Foreign staff working for ROs should have an employment relationship with the parent company abroad, and any disputes should be settled under the laws of that country

ROs are usually taxed on gross expenses with the overall tax burden around 11.75 percent of total monthly expenses; however, these rates may be increased by the relevant tax bureau according to the industry. If the chief representative is a foreign national, whether they stay in China or not, they shall be subject to individual tax based on the income derived from the RO. 

Set Up a Representative Office in Chengdu is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls

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