Set up Office in China
Set up Office in China
Marketing Advantages
As the top trade partner with China, America has maintained a long-term trading relationship with China. The Commerce Department's Exporter Data Base (EDB) reveals that in 2005 the total number of U.S. firms exporting goods stood at $231,736 billion. By the end of November 2005, the overall US-China trade topped $285 billion, expanding 23.3 percent each year after. The following statistics show the ever strengthening trading relationship between China and America.
China's Trade with the United States ($ billion)
  2006 2007 2008 2009 2010
US Exports 53.7 62.9 69.7 69.5 91.9
US Imports 287.8 321.4 337.8 296.4 364.9
Total 341.5 384.3 407.5 365.9 456.8
As traffic increases within trades between the U.S. and China, the two countries inevitably will run into disputes regarding Chinese individuals, companies, or even the government. Therefore, it is necessary for individuals, companies, or government to seek professional legal advice. Establishing a representative office in China would allow your firm to have the best outcome of a low-traffic and high-trade business. Similarly, Chinese enterprises will also encounter problems when conducting with American businesses; therefore, it is beneficial for both parties to engage in legal services that can be provided locally in China. By setting up a representative office in China your firm is expected to have tremendous growth in profits.
Annual Inspection of Representative Office & Representatives
Annual Inspection lasts for four consecutive months, beginning at the start of December till the end of March. The representative office will be set up before June 30th, and does not need to register for the annual inspection.
The representative office should submit the following materials of the previous year:
  1. Information regarding performance of legal services, including the legal affairs entrusted to Chinese law firms;
  2. Annual financial statement audited by an accounting firm, and documents certifying that its accounts have been settled within the territory of China and taxes have been paid according to law;
  3. Information on the change of its representatives and the employment of Chinese support staff;
  4. Information on the residence of its representatives that are in the territory of China;
  5. Information on the registration of the office as well as its representatives;
  6. Other information on the performance of the duties provided for in these Regulations.
  7. Certifications proving that the representatives of the office have not been given any criminal punishment or any punishment for a violation of lawyer's professional ethics or practice disciplines;
  8. Copies of the effective practice liability risk insurance of the representative office and the representatives thereof.
The most important materials are numbers (7) and (8).
It is recommended that the representative office submit the notarized documents as soon as possible to avoid any delays. Only after the annual examination are when the representative office and its representatives will be able to submit the annual registration.
Ceremony for issuing practice license and certificates
If the Ministry of Justice approves the application of setting up a representative office, they will issue the practice license and certificates to the representative office and to their representatives.

The Ministry of Justice will gather the recent approved applicants in Beijing, and hold a formal ceremony that issues the certificates.

If the representative office receiving the certificate is not able to send a representative to China at the specific time, our staff can be present in the ceremony as a representative of your office.
Location of the representative office
There is no restriction regarding the location address for the representative office. You may set up your office at any place in China, as long as it abides by the restrictions set by the Administration of Industry and Commerce.
Alteration of representative office and representatives
If a foreign law firm that has made the following alternation:
  1. The name, domicile of the headquarters, or a significant employee within the law firm is altered;
  2. The law firm is or had ever merged or split;
  3. An address change of the representative office;
  4. A name change of the representative office;
  5. The chief representative is or has been altered;
  6. The number of representatives has been increased or decreased.
If the items (4), (5), or (6) occurs, the representative office shall report to the local Department (Bureau) of Justice (hereinafter referred as DOJ). From the date the DOJ receives the application material, the local DOJ will handle the application within three months time.

The local DOJ will then present its examination opinions to the Ministry of Justice, which they will then handle the procedures for approval within six month from receiving the examination opinions. Therefore, the actual cost of time for altering the office name or its representatives is much longer than the regulations stipulate. If you want to make any change within the list above, we urge you to make early preparations to limit the cost of time.

In contrast, the items specified in numbers (1), (2), and (3) state that the representative office only needs to report to the local DOJ if there had been a recent change. Therefore the application can be finished within only three months.
Translation, Notarization & Authentication
The following documents shall be translated into Chinese, notarized by a notary public and authenticated by the clerk of Court of the County, the Secretary of the State and the relevant Chinese embassy or consulate.
Documents for representative office
  1. Application letter for establishing the representative office
  2. Documents evidencing a lawful establishment within the applicants home country
  3. Partnership agreement or articles of association
  4. A list of persons in charge including partners
  5. Application letters for stationing representative
  6. The power of attorney to each of the proposed representatives
  7. Letter confirming that the proposed chief representative is a partner or a person with equivalent standing in the applicant
  8. Certificates of the practice qualifications and required practice experience of each of the proposed representatives (three years required for the chief representative, and two years required for any other representative)
  9. Documents issued by the American Bar Association evidencing the membership of the proposed representatives
  10. Documents issued by the regulatory body evidencing good standing of the applicant and each of the proposed representatives
  11. Documents evidencing a valid professional liability insurance policy which covers the proposed representatives
Documents for stationing representatives
  1. Application letter for stationing representatives
  2. The power of attorney to each of the proposed representatives
  3. Letter confirming that the proposed chief representative is a partner or a person with equivalent standing in the applicant
  4. Certificates of the practice qualifications and required practice experience of each of the proposal representatives (three years required for the chief representatives and two years required for other representatives)
  5. Documents issued by the American Bar Association evidencing the membership of the proposed representatives
  6. Documents issued by the regulatory body evidencing good standing of each of the proposed representatives
  7. Documents evidencing valid professional liability insurance policy covering the proposed representatives
Capital Verification Certificate
In China, all the enterprises should provide a capital verification report before any establishment. Only CPAs are qualified to make a capital verification report. (Different from a bank statement issued by local banks.)

After sending a representative to join the ceremony held in Beijing, the representative office has to go through multiple formalities at the local government; such as: obtaining an occupation code at a local technical supervision department; opening an account at a local bank; and registering at a local taxation bureau.

Dream Express (hereinafter referred as DE) will assist you in opening an account in China and helping your foreign law firm remit capital to the account. DE will accomplish the capital verification formality with the cooperation of professionally licensed CPAs. Subsequently, your representative office in China will register at a local taxation bureau, then register with a local judicial administration department.
Annual Inspection on Foreign Exchange
To provide foreign-exchange management, foreign enterprises must annually do an inspection on foreign exchange during January 1- April 30, and the enterprises must report a schedule. This initial inspection must be completed first in order to be qualified for the next step.
The Representative office needs to provide the following materials:
  1. Verification Reports
  2. Approving certification and the re-examine of Foreign Economic Commission
  3. Business Licenses
  4. Bank Statements of Foreign Exchange Deposit Accounts
  5. Foreign Exchange Registration Certification and notices or approvals of the openings of foreign currency
  6. Approval of capital currency settlement
  7. Directory cards of import payment and Equity lists of import payment (paid State Administration of Foreign Exchange)
  8. Equity lists of export receipts (paid State Administration of Foreign Exchange)
  9. Registration certification of foreign-exchange bond, registration certification of foreign-exchange bond settlement,signing feedback form of foreign-exchange bond(supplied by enterprises with foreign-exchange bond)
  10. Detailed list of foreign currency accounts and the detailed schedule of debts
Capital Verification Certificate
Financial reports are the written documents summarizing and reflecting the financial position and operating results of an enterprise. Including: balance sheets; income statements; a statement of change in financial position (or a cash flow statement) together with supporting schedules; notes regarding the financial statements; and explanatory statements on the financial conditions.
  • A balance sheet is an accounting statement that reflects the financial position of an enterprise at a specific date.
  • An income statement is an accounting statement that reflects the operating results of an enterprise within an accounting period, as well as their distribution.
  • A statement of changes in financial position is an accounting statement that reflects comprehensively the sources and application of working capital and its changes during an accounting period.
  • Financial statements should include comparative financial information for the corresponding previous accounting period. If the classification and contents of the statement items of the previous accounting period are different from that of the current period, such items should be adjusted in conformity with that of the current period.
Notes regarding the financial statements are explanatory to related items in the financial statement of the enterprise so as to meet the needs to understand the contents of the statements. This should include:
  • the accounting methods adopted for the current and previous accounting periods;
  • Changes in accounting treatments between the current and prior periods, including the reasons for, and impact on the financial performance and status of the enterprise;
  • description of unusual items;
  • detailed information relating to major items listed in the accounting statements;
  • and any other explanations necessary to provide users with a clear view and understanding of the financial statements.
Foreigner's Employment Certification and Residence Permit
Representatives shall obtain Foreigner’s Employment certification within 15 days and Residence Permit within 30 days after entry.