(a)    The proposed name of the WFOE

(b)    The articles of associations of the company and the business scope, they must abide by foreign investment law.

(c)    The premises rental contract

(d)    The resumes and passports of the board members and their proper appointment by the mother company's legal representatives

(e)    The parent company's certificate of incorporation

(a)    As the RO is not a Chinese company it does not enter into business transactions as a Chinese company, but as a foreign company.

(b)    Consequently, the RO does not have a capital, it does not buy or sell in its own name.

(c)    It has a bank account that is used only to receive money from the mother company and pay for its local expenses.

(d)    The RO cannot declare customs, import or export goods, as the mother company does not have such a right in China. It can however receive mail, parcels of samples and send out such samples. It can also import equipment and goods for its own use. (Computer systems, other office equipment's.)

(e)    The RO can act as a liaison between its parent company and the parent company's business partners in China. It can conduct purchase or sales negotiations, quote prices or receive quotes from suppliers, effect market research, market and promote its parent company products, hold seminars, take part in exhibitions.

(a)    As a foreign company office in China, the RO does not fall under the labor law for Chinese companies. As well it is not entitled to enter into own arrangements with local staff as it cannot register for and provide social welfare.

(b)    Local staff can be hired with the approval of specialized Chinese human resources companies to which fees must be paid in addition to the staff's salary. These fees provide the necessary and legal social welfare cover to the local staff. The formal labor contract is signed with the Chinese HR company.

        This agreement may be copied to the HR company or remain strictly between the local staff and the RO.

(c)    Foreign representatives approved by the relevant authorities receive a work and residence permit as well as the corresponding work visa. A local staff can be appointed as Chief Representative.

(a)    The RO is liable to pay taxes in China, though it is not a Chinese company. These taxes can be calculated in 2 ways, subject to the approval by the Chinese Government:

- according to a percentage of the profits generated by the RO for the foreign company
- as a percentage of the expenses of the RO.

Tax authorities have no proper way to evaluate profit generated by the RO for the Mother company. As a result, they require at least that tax be no less than the percentage on expenses. This is usually the way foreign company choose to be taxed.

(b)   Staff (local and foreign) and liable to pay income tax according to Chinese law. This tax is paid by the employee or the foreign company as per agreement with the staff.

The RO must be approved before it can be established. The approval includes checking of:

(a)    The financial situation of the parent company (usually in the form of a bankers' reference letter issued by the banker of the parent company).

(b)    Latest audited financial statements must also be supplied (this requirement only applicable to RO in restricted industry).

(c)    The personal situation of the appointed Chief Representative, including his resume and passport.

(d)    The location of the RO (lease agreement for the office premise must be produced).