Why start a business in China?
Table of Contents
Rapid economic growth attracts investors to China and private entrepreneurs who are ready to develop production and service companies in the country. Those interested in opening new business in China should decide on the field of activity and then on a specific region.
At the same time, ensure that the type of activity you are interested in is not prohibited for foreigners. Choosing a niche in the Chinese market will determine the legal side of the issue and tax rates.
The specific set of documents and the form of the enterprise also largely depend on the region of registration.
In general, the procedure for starting a business in China consists of the following stages:
- Preliminary analysis of the market and obtaining the necessary advice
- Search for a counterparty when opening a joint venture
- Preparation of the required package of documents and legalization of existing foreign diplomas and certificates on the territory of the PRC
- Registration on the territory of the PRC
A crucial stage is the choice of the form of ownership when opening a new business in China. Experts recommend that those still pondering why to set up a business in China should be wary of joint ventures. With this option, it will not be superfluous to have an advantage in the board of directors in terms of the number of participants and a compatriot as a trusted representative of the company. Such a solution will allow you to control the activities of the company thoroughly.
It is essential to know other specific features of business organization in China:
- Different regions have different tax breaks.
- Chinese suppliers are reluctant to give discounts to foreign partners due to the extremely large number of offers.
- It is better to send Chinese employees to solve local government, tax, and customs problems.
- Proceedings in local courts can be lengthy.
Cost of doing business in China
The cost of doing business in China is inextricably linked with the payment of various fees for paperwork and the issuance of permits. In general, the total cost of covering them can be about $2,000. Add to that travel expenses, living expenses in China, and visa processing.
Often, entrepreneurs entrust the entire process of registering a foreign company in China to specialized agencies. As a result, the cost of their services can be $5000-6000. And this is in addition to all taxes and fees. That is, in general, the registration of a company can cost $7000-8000.
Do not forget about the authorized capital of your company, which cannot be less than $140,000. However, in the beginning, it is enough to provide 20% of this amount.
Corporate accounts in Chinese banks will be required to transfer the company’s authorized capital to them and store working capital in foreign currency and yuan; only three accounts can be opened in various banks. When choosing banks, make sure they are approved by the State Administration of Foreign Exchange.
The account opening procedure takes about 15-20 days; this will require the personal presence of an authorized person or beneficiary.
The package of documents for opening company accounts includes:
- originals and certified copies of constituent documents
- Certificate of Good Standing for companies that have been in existence for over a year
- original and certified copy of the power of attorney to open an account
- a business plan containing information about the company’s counterparties and the scope of its activities
- the decision of the board of directors to open an account
- personal documents of the authorized person:
- certificate of payment of telephone bills or utility bills to confirm the place of registration, dated no later than two months from the date of submission of documents
- invoices and contracts confirming the experience of the account manager- dated no later than 3-6 months from the date of submission of documents
- contact details of the account representative.
Why start a business in China?
New business in China is a real headache for many entrepreneurs who want to internationalize their business.
Indeed, if, in general, the decision to take a company abroad and choose a specific country for doing business is not an easy task, then with China, everything may seem more complicated.
Why set up a business in China? The internationalization of activities is essential for companies nowadays. Thus, in the current scenario, more and more businesses decide to go abroad to save money or look for new activities.
When it comes to internationalizing their operations, more and more companies are turning to the “Asian giant” to set up a company in China.
Why start a business in China? China is the most populous country globally (more than twice as many people live in China as in Europe). But this country’s commitment to innovation and technology is becoming a significant incentive for companies to open their offices and businesses in China.
Benefits of doing business in China
Understanding Chinese customs is one of the most important things you need to do if you plan to do new business in China.
But before diving into this, you need to assess the opportunities China offers to your industry and the scale of your business. You should also study the benefits that you are likely to receive if you start a business there.
Starting a business in China can be a very daunting task, especially for newbies. In other words, the road may not be as smooth as we would like it to be. However, there are many advantages to starting a business in this country.
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