Representative offices of foreign companies are to come under stricter control. A new circular published recently by the State Administration for Industry and Commerce of the People’s Republic of China (AIC) expressly stipulates that a representative office shall generally have a maximum number of four (Chinese/non-Chinese) representatives only (including a chief representative).
Some local administrations had already implemented this.
For instance, in Shenzhen, the maximum was three representatives plus a minimum number of Chinese supporting staff for the appointment of each representative.
To get registration a company has to show the head office has been operating for over ten years and a "letter of creditworthiness" of the head office issued by its bank.
The Chinese government seems to want to reduce the number of representative offices or force many of them to be incorporated as proper subsidiaries (WFOE). The Circular also seems to be an attempt to discourage foreigners from trying to obtain work and residence permits in China merely through establishing a "shell" representative office.
Mondaq reports the full article – which is very detailed – was written for Law-Now, the law firm CMS Cameron McKenna’s free online information service.