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.
