China Industrial news
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How to set up a resident representative office? (Beijing)
A: Foreign traders, manufacturers, shipping agents, economic organizations and
other groups shall report, according to their nature of the business, to the Ministry of
Commerce or other relevant ministries, committees or bureaus which are authorized
for the examination and approval of the setup of resident offices. Proxy authorized by
Mofcom will go through the examination and approval procedures for the
above-mentioned companies. The business activities of the established institutions
can only be in the range of business connection, products introduction, marketing,
technology exchange and consulting service and etc. Direct business activities are
prohibited.
Documents Required and Necessary Procedures
(1) Application for setting up the office: The application shall include background of the
enterprise, business conditions, purpose of the office to be established, name of the
office, person in charge, scope of business, location and operational term. Application
shall be signed by the chairman or president of the enterprise together with the
enterprise's seal.
(2) A certificate of authorization to the representative accredited to the office issued by
the chairman or president of the enterprise. (original)
(3) Copy of certificate of legal operation or copy of certificate of registration provided by
the proper authorities of the country or region where the enterprise comes.
(4) Bank reference provided by the bank of the country or region where the enterprise
comes: The bank reference, to be signed by the person in charge or business
manager of the bank, shall state clearly the enterprise's registered capital and
present amount of deposit, as well as the reputation of its flexing capitals after the
opening of the account.
(5) Resume of representative accredited to the office. The resume, including both
educational and working background, should be detailed, specific and true.
Disconnection is not allowed. Two photographs of each representative are required.
(6) Identification paper of the representatives. For representatives of foreign
nationality, copy of passport of the country he holds should be submitted. For
compatriots from Hong Kong and Macao, copy of certification for his returning to his
hometown and permanent resident identification should be submitted. If a domestic
personnel is to take the post of representative or chief representative, approval and
identification from Beijing Foreign Enterprise Service Corporation are needed.
How to set up a cooperative joint venture in China?
A: In a cooperative venture, the parties involved may operate as separate legal entities
and bear liabilities independently rather than as a single entity. A cooperative venture
may also be registered as a limited liability entity resembling an equity joint venture in
operation, structure, and status as a Chinese legal entity.
There is no minimum foreign contribution required to initiate a cooperative venture,
allowing a foreign company to take part in an enterprise where they preferred to
remain a minor shareholder. The contributions made by the investors are not required
to be expressed in a monetary value and can include excluded in the equity joint
venture process can be contributed such as labor, resources, and services. Profits in
a cooperative venture are divided according to the terms of the cooperative venture
contract rather than by investment share, allowing a more flexible schedule for return
on investment in cases where one investor provides cash while the other party's
investment is primarily in kind.
Greater flexibility in the structuring of a cooperative venture is also permissible
including the structure of the organization, management, and assets. There is no term
for unlimited terms in cooperative ventures, but also no provisions for the term of the
duration. The term of the cooperative venture contract may be renewed subject to the
consent of the parties involved and approval from the examination and approval
authorities. The foreign investor is permitted to withdraw their registered capital or a
portion thereof from the cooperative venture during the duration of the cooperative
venture contract.
Because of the unique privileges and added features offered to the foreign party in a
cooperative venture, trade unions must be allowed to represent the employees in
employment matters to protect the interests of the employees.
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