Opening an office in China

Question

I run a design company. To what extent would it be a) legally necessary and b) advisable to have a local partner were I to open an office in China? Does the answer depend on the nature of the office in China. For instance are requirements less stringent if I simply have a sales representative in China rather than having people who undertake design work there.

In addition would it suffice to have an operation in Hong Kong or Taiwan, or would I be better advised to open an office in mainland China?

Answer

Hi Jeremy,

With regards to setting in China, my opposite number in China will be able to provide details shortly. In the interim, you may wish to take a look at the various options in establishing a presence in China at www.cbbc.org/guide/setting_up/. This is the CBBC (China-Britain Business Council) advice on setting up in China.

Many companies do use Hong Kong as a gateway into China. This is especially so for SMEs as Hong Kong provides a relative easy place ie similar legal and accounting structures, use of English is common in local business community etc for overseas companies wishing to set up here. Hong Kong also serves as a good testing bed as it is a good way to see how well your services are received. One can then fine tune one’s business model and offerings before exploring the China market. In addition, Hong Kong and China operate the Closer Economic Partnership Agreement (CEPA). For instance, service suppliers in Hong Kong enjoy preferential treatment when setting up business in various service sectors in mainland China. Computer & related services is one such service sector which Amberlight may fall under. Further details can be obtained at www.tid.gov.hk/english/cepa/tradeservices/trade_services.html.

Obviously, there are pros and cons to setting up an operation in Hong Kong. You may wish to contact Invest HK (www.investhk.gov.hk), the government’s agency tasked to assist overseas companies in establishing a presence in Hong Kong.

I hope the above helps and should you require further details, please do not hesitate to let me know.

Best regards,

Patrick – UKTI Hong Kong

Answer

Hi Jeremy,

In your type of business, you can either set up a limited company or a representative office. In both cases there is no legal requirement to have a local partner. There is slight difference in the procedures / paper work of gaining the approval and registration.

Whether it is advisable to have a local partner, it is purely a business case depending on what your circumstance and requirements are and what can a partner bring to your operation, i.e if a partner can provide certain resource or expertise you don’t currently have, which benefits the local operation.

Selecting a location for a design business will depends on how you match your design expertise and track record with sector and geographical demands in a Chinese location. It is a case specific question. Happy to discuss further over the phone.

Dr. Kegang Wu, BCC LinkToChina Programme
(www.linktochina.org)

Answer

Jeremy

I realise you asked your question a while ago, and you may already have decided how you want to proceed in China. However, if you would like a chat about the various options open to foreign companies in China, I’d be happy to discuss with you.

Lise Bertelsen
China Business Adviser
China-Britain Business Council
www.cbbc.org

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