On January 4, 2010, the State Administration for Industry and Commerce and the Ministry of Commerce set new requirements for the registration of foreign representative offices in China in the Circular Concerning Further Strengthening the Registration Administration of Foreign Enterprises' Resident Representative Offices in China.

The new requirements add another level of paperwork authentication and also limit the initial term of a representative office. To establish a foreign representative office a company must:

1. Present proof that it has been duly incorporated and has existed for two years or more;

2. Present a notarized creditworthiness letter which must also be authenticated by the embassy or consulate general of China in that country or region;

3. Have an initial term of one year; and

4. Have a sufficient number of representatives (including the chief representative) to be suitable for the scope and scale of the liaison activities to be conducted by the foreign representative office (not to exceed four persons). For any existing foreign representative office with more than four representatives, the representative office is only allowed to reduce the number of current representatives rather than adding new representatives.

To extend the initial one-year term of a foreign representative office, the company must:

1.Apply for an extension;

2.Submit proof of existence by the relevant authority in the country or region where the company is located; and

3.Obtain a new registration certificate.

It is important for the foreign companies to be aware of such requirements and factor these requirements into consideration in choosing the entity to set up the foreign representative office in China and to prepare any application documents required for the registration of the foreign representative office.