China Tightens Control Over Representative Offices

A new circular published recently by the State Administration for Industry and Commerce of the People's Republic of China ("AIC") sets out more stringent operational rules for representative offices of foreign companies ("Circular"). Current restrictions are set out below.

1. Limitation on headcount of representatives

The Circular expressly stipulates that a representative office shall generally have a maximum number of four (Chinese/non-Chinese) representatives only (including a chief representative). This headcount limitation does not apply retroactively to existing representative offices, but to those which would consider alterations to their existing number of representatives. In fact, prior to the publication of this Circular, some local Administrations for Industry and Commerce ("local AIC") had already implemented a similar requirement. For instance, in Shenzhen, the local AIC only used to accept a maximum of three representatives, and in order to effect