China: New Regulations on Representative Offices in China

Last Updated: 5 January 2011
Article by Ulrike Glueck, Jeanette Yu and Nicolas Zhu

From March 2011, the costs and formalities of establishing and operating a representative office in China may increase. Foreign companies and their existing representative offices in China will need to conform to shorter time limits, new reporting obligations and stricter limitations on their business scope. Tougher penalties will be imposed if related legal restrictions are violated.

For many foreign companies, establishing a representative office has been the most efficient first step to enter into the Chinese market to date. From 2011, this form of business structure will need to be carefully considered.

The Measures for Administration of Registration of Resident Representative Offices of Foreign Enterprises ("Old Regulations") came into force almost 20 years ago and the Chinese government has only now decided to strengthen the administration of representative offices by imposing more regulatory rules.

The Regulations for Administration of Registration of Resident Representative Offices of Foreign Enterprises ("New Regulations") were published by the State Council on 19 November 2010 and will take effect as of 1 March 2011.  The New Regulations define the nature and scope of a representative office of a foreign enterprise in more detail, making the registration procedures more burdensome.

The main changes stipulated by the New Regulations are as follows:

Business Scope and Operational Activities

The New Regulations reinforce the restrictions on the business scope of a representative office. A representative office will only be permitted to carry out market research, presentation and promotional activities in relation to its parent company's products or services.  In addition, representative offices will also be allowed to undertake liaison activities in relation to product sale, service provision, domestic procurement and domestic investment.

Clearer guidance on the business scope implies that the current local practice of tolerating operational businesses by a representative office may no longer be continued and the authorities will pay closer attention to such activities.

Administrative Formalities

Despite the fact that some administrative formalities have been removed by the New Regulations, Chapters III and IV of the New Regulations increase the administrative burdens and expenses of establishing and operating a representative office significantly. Some new requirements were introduced in January 2010 by a circular issued by the State Administration for Industry and Commerce. These new requirements have now been standardised by the New Regulations.

The major changes are the following:

1. Only foreign enterprises that have existed for more than 2 years can set up a representative office in the PRC.

2. In the past, in many locations representative offices had to be located in buildings specifically designated for use by representative offices. Under the New Regulations such restrictions no longer apply. However, the competent Administration for Industry and Commerce ("AIC") can still order a representative office to relocate in accordance with the requirements of national security and public interests.

3. In the establishment process, the articles of association of the foreign enterprise must now also be submitted to the AIC. However, the New Regulations do not explicitly provide whether a simple copy is sufficient or whether the articles must be notarised and legalised. In the latter case, additional costs would be incurred.

4. A representative office shall have no more than 4 representatives (chief representative included).

5. A representative office must now submit an annual report on its business activities together with audited financial statements to the competent AIC between 1 March and 30 June each year.

6. A representative office is required to file with the AIC not only any changes concerning its own registration, but also changes to the authorised signatories, corporate structure, capital (assets), business scope or legal representative of its parent company within 60 days of such change occurring, or 30 days after PRC approval (if required) has been granted.

7. A representative office must announce its establishment and any change to its registration through media appointed by the AIC.

8. A representative office must now apply for deregistration within 60 days of any official decision to shut it down.

9. If a representative office has been ordered to shut down or its registration certificate has been revoked or cancelled by the AIC, no new representative office of this foreign enterprise can be registered within the following 5 years.  The exception to this is voluntary deregistration.

Strengthening of Sanctions

The New Regulations increase the sanctioning power of the AIC:

1. Penalties for undertaking illegal operational activities will be increased to RMB 500,000 from RMB 20,000 and the authorities have the right to confiscate the illegal income as well as the tools, equipment, raw materials, products and other assets used for operational activities. In serious cases, the registration certificate of the representative office can be revoked.

2. Foreign enterprises operating businesses that are permitted for representative offices without being registered as such, may be fined up to RMB 200,000 (increased from RMB 10,000). Non-profit operations falling outside the business scope can be subject to a fine of up to RMB 100,000 (increased from RMB 5,000). In serious cases the registration certificate of the representative office can be revoked.

3. Any delay in submitting the annual report and the audited financial statements, failure to conclude activities in the name of the representative office, or any delay in filings of changes of registration with the AIC will be subject to fines up to RMB 30,000. In serious cases, the AIC has the right to revoke the registration certificate of such representative office.

In summary, the New Regulations will increase the administrative burdens and, consequently, the costs of establishing and operating a representative office. Already in the last couple of months, various regulations have been issued to strengthen the administration of representative offices. This can be seen as a clear signal that the PRC government no longer tolerates operational activities carried out by representative offices. Foreign investors who engage in operational activities in China should consider restructuring their business into the form of a wholly foreign-owned subsidiary.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 04/01/2011.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.