9. Representative Offices (RO)
Many foreign enterprises have established representative offices in China as the first step of their market entry strategy, as they are fairly easy and inexpensive to establish. A representative office is not an independent legal entity and does not have its own capital.
A foreign enterprise can engage in a limited range of activities through a representative office. In general, a representative office is only permitted to engage in indirect business operations in China. It may represent the foreign enterprise in carrying on activities such as business liaison, product and service introduction, trade name promotion, market surveys and research, and warranty and after-sale service management. A representative office is not permitted to engage in direct business activities.
A representative office cannot employ Chinese employees directly. Local employees must be employed through a designated Chinese labour service agency. A representative office must have a chief representative, who may be foreign or local.