Through A Representative Office in China A representative office of a foreign company is limited to engaging in market research, liaison with potential customers of the home company, providing product information, and arranging product transportation. Representative offices may be used to facilitate their home companies' sales of goods into China, but any transaction arrangement made by a representative office must be consummated in the name of its home company. However, a representative of the office may execute contracts on behalf of the same company, if given a valid power of attorney to do so. So far 15 bonded zones have been established in China. The bonded zone in Waigaoqiao of the Pudong New Area in Shanghai is the most famous, and is allowed to call itself a free trade zone.
Foreign corporations can establish wholly owned trading companies inside the bonded zones.
Bonded zones are designed as areas for entrepot trade, where foreign companies can import raw material free of duty, assemble them and export them out of China. Products manufactured in bonded zones may also be sold into China, which will lead to the levy of the Chinese customs duties. In addition to the preferential treatment in finance and tax offered by the bonded zones, trading companies in Waigaoqiao can sell their goods directly to Chinese customers by using services offered by the free trade zone - this reduces the intermediary costs in the distribution chain that would have been incurred otherwise. With Import License Most Chinese enterprises do not have the capacity to engage in foreign trade themselves. Instead they have to engage, as their agents or distributors, local Chinese companies, which are authorized by the Chinese government to conduct export and import businesses.