As the top trade partner with China, America has maintained a long-term trade relationship with China. The Commerce Department's Exporter Data Base (EDB) reveals that in 2005 the total number of U.S. firms exporting goods stood at 231,736. And by the end of November 2005, overall US-China trade topped $285 billion in 2005, expanding 23.3 percent year on year. The following statistic show the more and more close relationship between China and America

As trading traffic increases, when U.S. enterprises conduct business with China, inevitably they would run into disputes with Chinese individuals, companies, or even the government. It is necessary for them to seek professional legal advice at that point. Establishing a representative office in China would allow your firm to best meets those demands. On the same token, Chinese enterprises also will encounter troubles when conducting business with America individuals, companies, or the government. Chinese business could also benefit from the legal services you provide locally in China. By setting up a representative office in China your firm should see tremendous growth in profits.

Annual inspection is from December to 31st March. The representative office set up before 30th June, does not need to register for the annual inspection. The representative office should submit the following materials of the previous year:

• (1)   Information on performance of legal services, including the legal affairs entrusted to Chinese law firms;
• (2)  Annual financial statement audited by an accounting firm, and documents certifying that its accounts have been settled within the territory of China and taxes have been paid according to law;
• (3)  Information on the change of its representatives and the employment of Chinese support staff;
• (4)  Information on the residence of its representatives in the territory of China;
• (5)  Information on the registration of itself and its representatives;
• (6)  Other information on the performance of the duties provided for in these Regulations.
• (7)  Certifications proving that the representatives of the office have not been given any criminal punishment or any other punishment for violation of lawyer professional ethics or practice disciplines;
• (8)  Copies of the effective practice liability risk insurance of the representative office and the representatives thereof.

The most important materials are the (7) (8) items. It's recommended that the representative office submit the notarized documents as soon as possible to avoid any delay. Only after the annual examination, representative office and representatives can submit the annual registration.

If the Ministry of Justice approves the application of setting up representative office, it will issue the practice license and certificates to the representative office and their representatives. The Ministry of Justice will gather the recent approved applicants in Beijing and hold a formal issuing certificates ceremony.

For representative offices, this ceremony will cause troubles if their sent representatives haven't been in China at that time. But our staff can be present in the ceremony in lieu of you, and the problem can be resolved.

There is no restriction of the location address for the representative office. You may set up your office at any place which is not restricted by the Administration of Industry and Commerce as other foreign enterprises in China.

If the Ministry of Justice approves the application of setting up representative office, it will issue the practice license and certificates to the representative office and their representatives. The Ministry of Justice will gather the recent approved applicants in Beijing and hold a formal issuing certificates ceremony.

For representative offices, this ceremony will cause troubles if their sent representatives haven't been in China at that time. But our staff can be present in the ceremony in lieu of you, and the problem can be resolved.

There is no restriction of the location address for the representative office. You may set up your office at any place which is not restricted by the Administration of Industry and Commerce as other foreign enterprises in China.

If a foreign law firm that has made the following alternation:

• (1)  The name, domicile of the headquarters or main responsible person of the law firm is altered;
• (2)  The law firm is merged or split;
• (3)  The representative office changes its address;
• (4)  The name of the representative office is changed;
• (5)  The chief representative is altered;
• (6)  The number of representatives is increased or decreased.

If the item (4)，(5)，(6) occurs , the representative office shall report that to the local Department (Bureau) of Justice. And from date of receiving the application materials, the Department (Bureau) of Justice will handle with it at least three months.

Then local Department (Bureau) of Justice will present its examination opinions to the Ministry of Justice, which shall handle the procedures for approval at least six months from receiving the examination opinions. So the actual time you will cost for altering office name or representatives is a much longer than the regulations stipulate. If you want to make any change of the above-listed situation, please make a early preparation.

Different form the situation specifies in (4)，(5)，(6), if item (1), (2),(3) occurs, the representative office only need to report that to the local Department (Bureau) of Justice which is a short time for the change. In common sense, it can be handle down in three months

The following documents shall be translated into Chinese, notarized by a notary public and authenticated by the clerk of Court of the County, the Secretary of the State and the relevant Chinese embassy or consulate.

Documents for representative office

• (1)  Application letter for establishing the representative office;
• (2)  Documents evidencing lawful establishment of the applicant in home country;
• (3)   Partnership agreement or articles of association;
• (4)  List of persons in charge and partners;
• (5)  Application letter for stationing representative;
• (6)  Power of attorney for each of the proposed representatives;
• (7)  Letter confirming that the proposed chief representative is a partner or a person with equivalent standing in the applicant firm;
• (8)  Certificates of the practice qualifications and required practice experience of each of the proposed representatives (three years required fort the chief representative and two years required for other representatives);
• (9)  Documents issued by BAR association proving the membership of the proposed representatives;
• (10)  Documents issued by the regulatory body proving good standing of the applicant and each of the proposed representatives;
• (11)  Documents proving valid professional liability insurance policy covering the proposed representatives.

Documents for stationing representatives

• (1)  Application letter for stationing representatives;
• (2)  The power of attorney to each of the proposed representatives;
• (3)  Letter confirming that the proposed chief representative is a partner or a person with equivalent standing in the applicant;
• (4)  Certificates of the practice qualifications and required practice experience of each of the proposal representatives (three years required for the chief representatives and two years required for other representatives);
• (5)  Documents issued by bar association proving the membership of the proposed representatives;
• (6)  Documents issued by the regulatory body proving good standing of each of the proposed representatives;
• (7)  Documents proving valid professional liability insurance policy covering the proposed representatives.

In China, all the enterprises should provide capital verification report before establishment. Only CPAs are qualified to prepare the capital verification report, which is different from the bank statement issued by local banks.

After sending a representative to join the ceremony held in Beijing to receive the representative office license & representative certificate, representative office has to go through different formalities at local government organizations, such as, obtain occupation code at local technical supervision department; open an account at local bank. And one important step is to register at local taxation bureau.

Dream Express (hereinafter referred as DE) will assist you to open an account in China and after your law firm remit capital to the account, DE will complete the capital verification formality with the cooperation with creditable CPAs. Subsequently, your representative office in China may register with local taxation bureau, and lastly with local judicial administration department.

According to provides of foreign-exchange managements, foreign enterprises must perform annual inspection on foreign exchange during the annual January 1-April 30. The enterprises must report schedule. Passing that, the enterprises can do the next foreign-exchange procedures and the next foreign-exchange business.

The firm needs to provide these materials:

• (1)  Verification Reporting;
• (2)  Approved certification and the re-examine of Foreign Economic Commission;
• (3)  Business Licenses;
• (4)  Bank Statements of Foreign Exchange Deposit Accounts;
• (5)  Foreign Exchange Registration Certification and notices or approval of foreign currency opening;
• (6)  Approval of capital currency settlement;
• (7)  Directory cards of import payment and Equities lists of import payment (paid of State Administration of Foreign Exchange);
• (8)  Equities lists of exports receipt (paid of State Administration of Foreign Exchange);
• (9)  Registration certification of foreign-exchange bond, registration certification of foreign-exchange bond settlement，signing feedback form of foreign-exchange bond(supplied by enterprises with foreign-exchange bond);
• (10)  Detailed list of foreign currency accounts and the detailed schedule of debts.

Financial reports are the written documents summarizing and reflecting the financial position and operating results of an enterprise, which include balance sheet, income statement, statement of changes in financial position (or a cash flow statement) together with supporting schedules, notes to the financial statements, and explanatory statements on financial condition.

• (1)  A balance sheet is an accounting statement that reflects the financial position of an enterprise at a specific date;
• (2)  An income statement is an accounting statement that reflects the operating results of an enterprise within an accounting period, as well as their distribution;
• (3)  A statement of changes in financial position is an accounting statement that reflects comprehensively the sources and application of working capital and its changes during an accounting period;
• (4)  Financial statements should include comparative financial information for the corresponding previous accounting period. When so required, if the classification and contents of statement items of the previous accounting period are different from that of the current period, such items should be adjusted in conformity with that of the current period.

Notes to the financial statements are explanatory to related items in the financial statement of the enterprise concerned so as to meet the needs to understand the contents of the statements. This should include mainly:

• (1)  The accounting methods adopted for the current and previous accounting periods;
• (2)  Changes in accounting treatments between the current and prior periods, including the reasons for, and impact on the financial performance and status of the enterprise of such changes;
• (3)  Description of unusual items;
• (4)  Detailed information relating to major items listed in the accounting statements; and
• (5)  Any other explanations necessary to provide users with a clear view and understanding of the financial statements.

Representatives shall obtain Foreigner's Employment Certification within 15 days and Residence Permit within 30 days after entry.