Representative Office (RO) is the easiest type of foreign investment structure to set up in China. It is an attractive way for foreign investors to become familiar with the market and better understand the operations side of China.
Some of the benefits and advantages of having a RO include the fact that there is no capital requirement to be operational. The expenses to set up an RO are substantially lower than other forms of foreign-invested enterprises and you would be able to carry out liaison activities between your headquarters and clients or suppliers in China.
However, every coin has two sides. According to relevant regulations, an RO has its limited business scope and cannot be engaged in direct business activities. Any income derived from business transactions is not allowed to go through the RO local bank account and official invoices cannot be issued.
A RO can only legally engage in business liaison with local China contacts and suppliers, conducting market research and surveys, product presentation and introduction to the China market.
A RO has no legal personality and is limited in its hiring ability. Local employees can only be hired through government HR agencies and no more than four foreign employees can be hired per RO.