Appointing a China Commercial Representative: What a Local Representative Can Legally Do

Appointing a China commercial representative means one thing above all: a mandate plus a power of attorney — not an entity

A China commercial representative is a mainland company or individual you appoint to act for you in China under a written mandate, while legal liability for what they do in your name stays with you. Appointing one is a contract question, not a company-registration question. Under China's Civil Code you have three distinct tools — an agency mandate (委托代理), a commission agency (行纪) and an intermediary engagement (中介) — and they give the person on the ground very different powers.

That single distinction answers most of the question "how do I appoint a local representative or commercial agent in China?" The confusion is usually terminological. "Representative", "agent", "distributor" and "representative office" are used interchangeably in market-entry decks; in Chinese law they are four different instruments with four different liability profiles, and only one of them gives you an office with your name on the door.

A representative is not a substitute for an entity. It is a substitute for you being there — and it can only carry the powers the law and your mandate actually give it.

Three different legal animals hide behind the word "representative"

The Civil Code separates them cleanly, and the separation matters the moment a Chinese buyer asks who is liable.

| | Intermediary (居间/中介) | Agent (委托代理) | Commission agent (行纪) | |---|---|---|---| | Legal basis | Civil Code Art. 961–966 | Civil Code Arts. 161–175, 919–936 | Civil Code Arts. 951–960 | | What they do | Report opportunities, broker introductions | Act in your name, within your mandate | Trade in their own name, on your account | | Who is bound to the Chinese buyer | You, directly | You, directly (Art. 162) | The commission agent (Art. 958) | | Who is paid if no deal closes | No remuneration, unless agreed for expenses (Art. 964) | According to the mandate contract | According to the mandate contract | | Typical use | Sourcing, distributor introductions, events | Negotiations, tenders, liaison, procurement | Import/trading intermediary that contracts onward |

Two consequences follow, and both are commercially significant.

First, an intermediary has no authority to bind you, which is exactly what many brands want in the exploratory phase — but Article 964 means a pure intermediary who produces nothing is owed nothing, unless you agreed to reimburse defined costs. Second, bypassing the intermediary does not save the fee: Article 965 provides that a principal who, after using an intermediary's services, circumvents the intermediary and contracts directly must still pay. If your concern is being cut out of your own supply chain, the relevant protection is a non-circumvention clause — and Chinese law already points that way.

What a representative can do — and the five things only an entity can do

With a correctly drafted written mandate, a China-side representative can negotiate, take quotes, attend tenders, visit factories, run market research, handle inspections, manage logistics providers and represent you in Chinese-language discussions with buyers and platforms.

Five functions remain outside a representative's reach no matter how broad the mandate:

1. Be the importer of record. The declaration must be filed by a mainland enterprise registered with customs. A representative office's permitted activities are liaison only, which is why importing for resale is not one of them; the entity question is set out in importing into China without a local company.
2. Issue a Chinese VAT invoice. Domestic B2B buyers expect one, and an offshore principal cannot issue it — see selling on 1688 as a foreign brand.
3. Employ your China staff. Only an employer established inside China falls within the Labor Contract Law, and a representative office must engage staff through the local foreign-affairs service unit.
4. Hold product-specific approvals that require a Chinese licence or filing holder — the registration chain is mapped in which Chinese agency regulates my product.
5. Hold a domestic storefront or licence in your brand's own name on platforms such as 1688.

Everything else — the actual work of being present, talking, qualifying and following up in China — a representative can do.

The four ways to put someone on the ground in China

The route that is right for you is decided by a single question: does the person need to bind you, or merely represent you? If they need to sign, you need either a properly scoped power of attorney or an entity. If they only need to open doors and qualify buyers, the lightest route — a representation agreement — is usually enough, and it is reversible.

The representative office, specifically

China's rules on the foreign representative office are settled and, from 2024, current: the Administrative Regulations on Registration of Resident Representative Offices of Foreign Enterprises (State Council Order No. 584, published 19 November 2010, in force 1 March 2011, third amendment 10 March 2024). The regulation defines the office as a non-profit establishment with no legal personality (Art. 2), prohibits for-profit activity (Art. 13), and lists what is permitted (Art. 14): market research, display and promotion connected with the foreign enterprise's products or services, and liaison activity connected with product sales, service provision, domestic procurement and domestic investment. Where a law or State Council rule requires approval for such activity, approval must be obtained.

Registration sits with the market regulation authority of the province, autonomous region or municipality (Art. 5), and the office must file an annual report between 1 March and 30 June that includes its activity and audited income and expenditure (Art. 6). One chief representative may be appointed, with one to three representatives (Art. 11), and the office's term may not exceed the foreign enterprise's own existence (Art. 16). The penalty structure is what practitioners actually cite: unregistered operation carries RMB 50,000–200,000 (Art. 35); for-profit activity carries RMB 50,000–500,000, confiscation of the proceeds and of the tools, equipment, materials or products used, and revocation of the registration certificate in serious cases. Hong Kong, Macao and Taiwan enterprises register their mainland offices by reference to the same rules (Art. 44).

Two practical points follow. A representative office is a liaison vehicle, not a sales vehicle — it can support domestic procurement and sales liaison, but it cannot invoice Chinese customers or book the foreign enterprise's revenue. And it is not an employer: Article 11 of the State Council's 1980 Provisional Regulations on Administration of Resident Representative Offices — still in force — requires the office to entrust the local foreign-affairs service unit, or another designated unit, when it engages staff. The staff are contracted by that unit and dispatched to the office, which is why a representative office cannot simply sign employment contracts of its own. China's Supreme People's Court confirmed in Judicial Interpretation (II) on labour disputes (Fa Shi [2025] No. 12, in force 1 September 2025, Art. 5) that a lawfully established representative office may be a party to a labour dispute case, and that the foreign enterprise can be joined — a procedural clarification that makes disputes easier to litigate, not a grant of employer status.

The tax consequence of a mandate that goes too far

This is the clause most representation agreements get wrong. Article 5 of the Implementation Regulations for the Enterprise Income Tax Law (State Council Order No. 512) defines an establishment or place in China to include management, business and office establishments — and then adds: where a non-resident enterprise entrusts a business agent in China to conduct production or business operations, including entrusting a unit or an individual to habitually conclude contracts on its behalf, or to store and deliver goods, that business agent is deemed to be an establishment or place of the non-resident enterprise in China.

In plain terms: a representative who introduces, researches and reports does not, of itself, give you a taxable presence. A representative who routinely signs contracts in your name, or warehouses and delivers your goods, may. The drafting consequence is direct — if you want the light route, the mandate should say that the representative has no authority to conclude contracts binding on you, that orders are subject to your written confirmation, and that the representative does not hold or deliver your inventory. If you want a representative who can close deals without you, that is a legitimate choice, but it is a choice with an income-tax price, and it should be modelled before signature rather than discovered at assessment. Note also that a representative office is itself taxed under a deemed-assessment method: under the SAT's Provisional Measures for Tax Administration of Resident Representative Offices of Foreign Enterprises (Guo Shui Fa [2010] No. 18), where books are inadequate the tax authority may assess income, and the deemed profit rate may not be lower than 15%; the conversion formula was amended by SAT Announcement No. 28 of 2016, effective 1 May 2016, to taxable income = current-period expenses ÷ (1 − deemed profit rate) × deemed profit rate.

The appointment document: what the power of attorney has to say

The Civil Code is unusually specific about the instrument itself. Article 165: where the authorization for agency is in writing, the power of attorney shall state the agent's name, the matters entrusted, the scope of authority and the duration, and shall be signed or sealed by the principal. Article 162 supplies the consequence — an act performed by the agent within the scope of authority and in the principal's name binds the principal.

That has three drafting implications for a foreign brand. First, an open-ended "full authority" mandate is a poor instrument: the four elements are the ones Chinese counterparties and courts look for, and broad authority invites the argument that an act fell inside it. Second, the mandate must be time-limited — and Article 173 lists how it ends: expiry of the term or completion of the matter, revocation by the principal, resignation by the agent, loss of capacity, death, or termination of the legal person or unincorporated organisation. A representation agreement should mirror those termination triggers so the contract and the power of attorney end together. Third, the signature block matters: a foreign enterprise's power of attorney needs an authorised signatory, and — where it is used before Chinese authorities, banks or courts — authentication.

Authentication got significantly easier in 2023. The Hague Apostille Convention entered into force in China on 7 November 2023: public documents issued in another contracting state, including corporate powers of attorney, now need only that state's apostille and no longer a Chinese consular legalization, and the same applies in reverse. China's Ministry of Foreign Affairs stated that the change cuts the time to put a document in usable form from roughly 20 working days to a few days — an average reduction of about 90% across contracting parties — and removes consular legalization fees. Where your home state is not a contracting state, the older legalization route still applies, and it should be built into the timeline rather than discovered at the bank counter.

How to appoint a China representative in five steps

1. Write the mandate from the liability backwards. Decide first whether the representative may conclude contracts binding on you (tax consequence, above) and whether the relationship is agency, commission agency or intermediary. That decision fixes everything else.

2. Match the vehicle to the function. Liaison and research only → representation agreement, or a representative office if you want a registered presence under your own name. Sales, invoicing, licences, storefronts, employment → an entity. Hiring quickly without an entity → dispatch or outsourced services, within the 10% cap and the three-position rule.

3. Issue a power of attorney that satisfies Article 165 — named agent, enumerated matters, defined authority, fixed term, signed and sealed — and that is authenticated (apostille where available) before it is needed.

4. Verify the counterparty before appointing it. A mandate is only as good as the entity that holds it; confirm the registration, scope of business, legal representative and any abnormal-operations listing through the National Enterprise Credit Information Publicity System (gsxt.gov.cn) rather than relying on a deck.

5. Put reporting and controls in the contract. What the representative may spend, what pricing floors bind it, how quotes and buyer data are reported, who owns the relationship, and what happens on termination. Commission structures, expense-only mandates and retainer-plus-success-fee mandates produce very different incentives; choose deliberately.

How GOODSINFINITE acts as the China-side representative

Representing a foreign brand in China is a service we run as an operating business, not as an introduction fee. We combine the mandate layer with the mainland operations that make it effective:

• China commercial presence. We help you establish a China office, recruit local staff, commission market research, exhibit at trade shows and build B2B channels such as 1688 — then operate them.
• Representation in negotiations. We meet your prospective Chinese distributors, wholesalers and platform buyers in person, in Chinese, within a mandate you control — with a written power of attorney, defined authority and reporting you can audit.
• Hong Kong IOR plus mainland import operations. GOODSINFINITE TRADE LIMITED (Hong Kong) acts as the overseas principal and settlement layer, while a mainland-licensed operation handles declaration, duty and import VAT. Our group's mainland operations file more than 20,000 customs declarations a year and peaked at 540,000 bonded orders in a single day at Double 11.
• A compliance set-up that survives scrutiny. Structuring the mandate so it does not create an unintended taxable presence, keeping the import and product-registration chain inside the licensed entities that must hold it, and documenting who is responsible for what — before your first Chinese customer asks.

You keep the brand, the pricing decision and the customer relationship. We build and staff the China-side presence those things depend on.

FAQ

Can a foreign company appoint a China commercial representative without setting up a Chinese company? Yes. Appointing a representative is a contract plus a power of attorney, not an entity. Under the Civil Code you can appoint a mainland company or individual as your agent — Article 165 requires a written power of attorney stating the agent's name, the matters, the scope of authority and the duration — as a commission agent trading in its own name for your account (Art. 951), or as an intermediary who only introduces counterparties (Art. 961). What you cannot do without an entity is employ staff, issue Chinese VAT invoices, hold a domestic storefront or act as importer of record; those functions require a mainland-registered enterprise.

Does appointing a China representative create a permanent establishment? It can. Article 5 of the Implementation Regulations for the Enterprise Income Tax Law provides that where a non-resident enterprise entrusts a business agent in China to conduct production or business operations — including entrusting a unit or an individual to habitually conclude contracts on its behalf, or to store and deliver goods — that agent is deemed to be an establishment or place of the non-resident enterprise in China. A representative limited to research, introductions and reporting sits outside that formulation; one who routinely binds you does not.

Can a representative office in China sign contracts and invoice customers? No. Under State Council Order No. 584, as amended in 2024, a representative office is a non-profit office with no legal personality and may not engage in for-profit activity. Its permitted activities are market research, display and promotion for the foreign enterprise's products or services, and liaison for sales, service provision, domestic procurement and domestic investment. Invoicing Chinese customers for the foreign enterprise's goods, or booking its revenue, falls outside that scope; the penalty for for-profit activity is RMB 50,000 to RMB 500,000, with revocation of the registration certificate in serious cases.

Can a foreign company hire employees directly in China? Not as the employer. The Labor Contract Law applies to employers established within China, and an offshore company is not one. A representative office must, under Article 11 of the 1980 State Council rules still in force, entrust the local foreign-affairs service unit to engage staff, who are contracted by that unit and dispatched to the office. Separately, dispatched workers may not exceed 10% of a user entity's total workforce and may only be used on temporary, auxiliary or substitute positions under the MOHRSS Provisional Regulations on Labor Dispatch (Order No. 22).

Does a power of attorney for a China representative need consular legalization? Usually not any more. The Hague Apostille Convention entered into force in China on 7 November 2023: public documents issued in another contracting state, including a corporate power of attorney, need only that state's apostille, with no Chinese consular legalization. China's MOFA confirmed the change cuts average cross-border document time from about 20 working days to a few days. For non-contracting states, the traditional legalization route still applies.

Sources

• Civil Code of the PRC — Arts. 161–173 (agency; Art. 162 acts bind the principal, Art. 165 power-of-attorney contents, Art. 173 termination) — Inner Mongolia Zhalantun Procuratorate, full text
• Civil Code of the PRC — Arts. 919–966 (mandate contracts, Art. 951 commission agency, Arts. 961–965 intermediary contracts) — Ganzhou SASAC, full text
• Administrative Regulations on Registration of Resident Representative Offices of Foreign Enterprises, State Council Order No. 584 (2010, third amendment 2024) — Arts. 2, 5, 6, 11, 13, 14, 16, 35, 44 — Ministry of Justice, current consolidated text
• How to register a resident representative office of a foreign enterprise — permitted activities, prohibition on profit-making activity, representative numbers — Inner Mongolia Administration for Market Regulation
• Provisional Regulations of the State Council on Administration of Resident Representative Offices of Foreign Enterprises (Guo Fa [1980] No. 272) — Art. 11, engaging staff through the local foreign-affairs service unit — Beijing Municipal People's Government
• Implementation Regulations for the Enterprise Income Tax Law, State Council Order No. 512 — Art. 5, a business agent that habitually concludes contracts or stores and delivers goods is deemed an establishment or place — State Taxation Administration 12366 service platform
• Provisional Measures for Tax Administration of Resident Representative Offices of Foreign Enterprises (Guo Shui Fa [2010] No. 18) — Art. 8, deemed profit rate not lower than 15% — Shanxi Provincial Tax Service
• Announcement No. 28 of 2016 amending the deemed-income formula for non-resident enterprises, effective 1 May 2016 — State Taxation Administration
• Provisional Regulations on Labor Dispatch, MOHRSS Order No. 22, in force 1 March 2014 — Arts. 3–4, three-position rule and 10% cap — Ministry of Human Resources and Social Security
• SPC Judicial Interpretation (II) on labour disputes, Fa Shi [2025] No. 12, in force 1 September 2025 — Art. 5, representative offices as parties to labour disputes — Supreme People's Court
• MOFCOM: abolition of the foreign trade operator filing and registration requirement following the 30 December 2022 amendment of the Foreign Trade Law — Ministry of Commerce
• The Apostille Convention enters into force in China on 7 November 2023 — apostille replaces consular legalization — Ministry of Foreign Affairs; see also gov.cn report on the time and cost reduction

Related reading

• Importing into China Without a Local Company: The Importer-of-Record Path
• WFOE vs. Representative Office in China
• China Market Entry Agency vs. WFOE
• Hiring Staff in China for a Foreign Brand
• China Distributor for Foreign Brands
• Selling on 1688 as a Foreign Brand
• Enter China