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How Do You Set Up A Representative Office In China

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Representative Office in China

An increasing number of Western businesses are looking to establish operations in China in order to support their marketing efforts and get access to the Chinese market. A business can effectively market its services in China and draw customers by opening a representative office there.

Compared to foreign-invested corporations in China, it is simpler for international businesses to establish representative offices. As a result, China offers several chances for both new and current businesses to grow.

Companies who want to achieve that must pick the right legal framework for their operations in China. Each structure has benefits and drawbacks, so business owners and executives should carefully assess which best suits their aims and objectives.

What Is A Representative Office?

A representative office is a location set up by a business or other legal body to carry out marketing and other non-transactional tasks, typically abroad. Since they are not utilized for actual “business,” representative offices generally are easier to create than a branch or subsidiary (e.g., sales).

The organization that serves as the liaison between the Head Office and the Representative Offices abroad is the Representative Office. Foreign investors have made substantial use of them in developing nations like China, India, and Vietnam.

They are constrained since they cannot invoice locally for products or services. Foreign investors are frequently used in industries including product procurement, quality assurance, and liaison work.

Setting Up A Representative Office In China

Getting appropriate counsel is important for new business people because opening an office in China might be difficult.

The setup and registration procedure may begin once you’ve determined that a Rep Office is the best choice for your company.

Follow the steps given below to set up a Representative Office in China successfully —

1.    Get Approval

Choosing a name is the first step in creating an office in China. All kinds of businesses must adhere to tight regulations regarding company names.

Confirming that a suggested name is available and does not break any special letters or word regulations is important. The local AIC (Administration of Industry and Commerce) will review and approve this when filed.

2.    Rent Your Office Space

An acceptable leasing agreement must be supplied in order to apply for a representative office.

This has to be for at least a year, be in the city of registration, and be on a permitted commercial (non-residential) property. For a reasonable cost, FDI China may give this address for administrative needs!

3.    AIC Application

The local AIC receives the application form and the necessary supporting papers. A business registration certificate typically takes 2 weeks to be granted if everything is in order. The representative office is now operational and properly licensed.

4.    Carve Business Seals

As with every Chinese corporation, chops, or seals, are utilized for a representative office. These signify the top tier of business permission. The Public Security Bureau can provide the varied chops required in various locations (PSB).

5.    Local Tax Office Registration

Taxes, often computed as a percentage of total costs, must be paid starting on the registration day.

6.    Obtaining VISA Permits

The rep office chief representative and any other foreign employee must apply via the PSB and get visas (up to 4).

7.    Open A Bank Account In China

For daily business expenses, a straightforward Chinese RMB account is required. We can also file for a foreign exchange registration certificate if foreign currency is necessary.

Advantages Of A Representative Office In China

The quickest and easiest way for foreign companies to begin operations in China is through a Representative Office (commonly abbreviated as Rep Office or RO).

It permits foreign businesses to do market research or run operations in China but prohibits them from making a profit. A Rep Office may often be established in a shorter amount of time than a WFOE.

Your business may maintain an official presence in China by establishing a rep office there. This enables you to host employees here, have a location for meetings with clients and suppliers, and organize work.

Most international corporations may quickly and easily open a rep office because there is no requirement for registered capital.

A representative office is capable of controlling marketing and advertising inside China. As a result, it is possible to find new clients and providers. Facilitated technological and idea exchange with regional groups.

You can carry out Quality Control and other advisory and regulatory tasks relating to the parent company’s business operations in China.

Just make sure to keep an eye on the security of the project. Add a tool or two if you can, and don’t forget to consult with a cybersecurity expert too. Just to be sure, you know.

Know The Limitations

A rep office is a parent business’s subsidiary that functions more like an extension of the parent company than a distinct legal entity.

Since a rep office cannot engage in commerce, it is not regarded as a legitimate enterprise in China. In addition, a parent company’s address must be in a commercial building and have been in operation for at least two years.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

Honeywell Flour, MTN, Others Pull Market Back by 0.01%

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Honeywell Flour

By Dipo Olowookere

The depreciation printed by the shares of Honeywell Flour, MTN Nigeria, Ecobank and 10 others pulled back the Nigerian Exchange (NGX) Limited from the bulls’ territory into the danger zone by 0.01 per cent on Thursday.

It was the first trading session in December, and the stock market could not sustain the positive moment it recorded on the last day of the previous month due to the selling pressure on the equities mentioned above, though investor sentiment remained strong.

According to data from the bourse, the market breadth was positive yesterday as there were 15 price advancers and 13 price decliners led by Honeywell Flour, which dropped 7.89 per cent to trade at N2.10. RT Briscoe went down by 7.41 per cent to 25 Kobo, Wema Bank declined by 5.45 per cent to N3.12, FCMB contracted by 4.18 per cent to N3.21, and Cutix retreated by 2.84 per cent to N2.05.

On top of the gainers’ log was UPDC REIT, which improved its share value by 9.09 per cent to N3.00, McNichols rose by 8.93 per cent to 61 Kobo, Japaul jumped by 7.41 per cent to 29 Kobo, Nigerian Breweries 7.14 per cent to N45.00, and Royal Exchange grew by 4.76 per cent to 66 Kobo.

Yesterday, investors transacted 172.9 million shares valued at N2.8 billion in 3,073 deals compared with the 107.0 million shares valued at N1.3 billion traded in 3,227 deals in the midweek session, representing a decline in the number of deals by 4.77 per cent, an increase in the trading volume by 61.55 per cent, and a surge in the trading value by 115.63 per cent.

The increase in the market turnover was driven by the 49.8 million shares of FCMB traded by investors during the session. Courteville traded 16.9 million stocks, Access Holdings sold 12.0 million equities, UBA traded 10.8 million shares, and Zenith Bank exchanged 9.8 million shares.

Business Post reports that the insurance and energy counters went down by 0.12 per cent and 0.08 per cent, respectively, while the banking and consumer goods sectors went up by 2.16 per cent and 0.77 per cent apiece, with the industrial goods space closing flat.

At the close of trades, the All-Share Index (ASI) receded by 3.40 points to 47,656.64 points from 47,660.04 points, and the market capitalisation retreated by N2 billion to N25.957 trillion from N25.959 trillion.

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Economy

Ecobank Q3 Earnings Swell Amid 12% Jump in Non-Interest Income

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Ecobank non-interest income

By Dipo Olowookere

In the third quarter of 2022, Ecobank Transnational Incorporated (ETI) improved its gross earnings by 11 per cent to N761.3 billion from N686.8 billion in the same period of last year, with interest income growing by 9 per cent to N485.8 billion from N445.1 billion, and interest expense surging by 8 per cent to N174.2 billion from N160.7 billion.

In the period under consideration, fee and commission income expanded by 15 per cent to N165.5 billion from N144.0 billion, driven by higher cash management and related fees, as well as more card management fees, which offset the shortfall in other fees and portfolio and other management fees.

Business Post reports that bank charges, brokerage fees paid, and other fees paid by the lender triggered a 41 per cent increase in the fee and commission expense by Ecobank in the first nine months of this year to N21.0 billion from N14.9 billion.

The trading income generated by the bank grew to N93.2 billion in Q3 of 2022 from N85.5 billion in Q2 of 2021, other operating income rose to N16.7 billion from N11.6 billion, but the net investment income declined to N4.4 billion from N5.6 billion.

In the first nine months of 2022, Ecobank improved its non-interest income by 12 per cent to N258.7 billion from N231.7 billion, while operating income jumped by 11 per cent to N570.4 billion from N516.2 billion.

In the period under consideration, the operating costs of the company increased by 7 per cent to N320.9 billion from N300.7 billion, with personnel costs rising to N138.6 billion from N132.4 billion.

The bank, in the financial statements filed to the Nigerian Exchange (NGX) Limited, said its pre-tax profit improved by 17 per cent to N168.7 billion from N143.7 billion, while the post-tax profit gained 12 per cent to N1177.4 billion from N104.5 billion.

On a year-to-date basis, its loans disbursement to customers was marginally down to N4.03 trillion from N4.06 trillion in FY 2021, while deposits from customers went down to N8.06 trillion from N8.36 trillion.

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Economy

NGX Helps Governments, Corporates Secure N3.5trn Debts

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Cross Deals

By Aduragbemi Omiyale

Debt instruments worth N3.5 trillion have been raised from the capital market in 2022 with the assistance of the Nigerian Exchange (NGX) Limited.

These funds were secured by the federal, state governments, and corporate organisations through the issuance of bonds and commercial papers, with the proceeds used to finance projects and business operations.

The NGX has always provided an avenue for organisations to seek cheap capital from investors by positioning itself as the prime location for raising funds.

According to the Divisional Head of Capital Markets at the NGX, Mr Jude Chiemeka, the capital market could serve as the primary source of bulk mobilisation of capital to finance developmental projects, and NGX had implemented an array of incentives, programmes and capacity building workshops for investors.

“The pension fund industry, for example, has been able to leverage the issuances done by the DMO in recent times, and a lot of financing has come from them,” he said at the Nigeria Integrated National Financing Framework (INFF) dialogue on Channels TV with the theme How Can Nigeria Finance its Development Priorities.

“As an exchange, we provide the platform that will enable the government to finance projects through green instruments that these investors can invest in and ultimately benefit from the returns. And that is why it’s critical to ensure there’s constant investor education, sound governance and regulation.

“If you take a look at the recently revamped Capital Market Master Plan, there’s a conversation there around increasing retail investor participation in our markets,” he added.

INFF emanated as a result of a partnership among the FG, the United Nations Development Programme (UNDP), and European Union (EU) to support Nigeria in mobilising greater amounts of private and public resources to finance its development agenda.

Speaking further, Mr Chiemeka said the goal is to revamp the current active retail participation level to 5 million by 2025.

“NGX has been able to facilitate the raise of about N3.5 trillion since January 2022 for corporates, federal and state governments. We are very well equipped to support the financing of these capital projects because we have the right platform.

“Today, you talk about the African Exchanges Linkage Project, which commenced on November 18 and will be launched in December. That gives Nigeria the ability to leverage the investor base in other capital markets to fund the projects to grow the economy and lift people out of poverty,” he stated.

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