Shanghai Expats
Business

Setting up a representative office in Shanghai

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Pablo Original post #1
A friend in Hong Kong wants to do this. He has a company already long-term established in HK but now needs a rep office here. He has told me that he has been given a quote already for (I think) around HK$10,000. Are there any companies/agents in Shanghai that could do it cheaper or better/faster (perhaps because they are 'in town')? He also has been told that by having a rep office here this will give him certain tax benefits in Hong Kong. I know zip about this so I'd appreciate any advice that I could then pass on to my mate. Cheers!

3 Replies

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frenchlover #2
I am told the equivalent of USD 1,000 is the going rate. Thats all I know I dont have a rep office here we operate with WFOEs. I think for most purposes rep offices are useless nowadays and taxed on expenses, which means you pay tax even if you dont make any money. Having a WFOE to do the same will cost you no tax (since no revenue here, all in HK).
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guyintown #3
The rate is much more reasonable for a professional and experienced lawyer. As to the tax benefit, you will be required to pay business tax and enterprise income tax in China although you can not invoice your clients.
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TimBYD #4
WFOE the minimum nowadays is around 100k RMB for a consulting WFOE. You dont go very far with that kind of money... need to pay people right? Basically the minimum capital is so low nowadays that your friend better look at how much the operation will cost, cash flow etc. Setup cost around 2-5k USD depending who you talk to. Not sure about WFOE vs. Rep Office in your friends case, but we looked at this recently for offshore software development (no revenue in China, all direct to US) and the WFOE was the best - we just put enough capital to fund the operation (need this anyway!), pay tax on revenue (zero) and profit (zero). The Rep Off would have to pay tax on expenses, plus all the fees for recruiting people through FESCO/CIIC etc.

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