Why start a business in China?

Why start a business in China?

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:
  1. passport
  2. 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.

The stability of doing business in China is one of the main benefits of registering a company in China. Political, economic, and social stability has significantly helped China develop steadily in all past decades. The country has remained very stable for three decades now. Economic, social, and political stability is essential to ensure a good business environment. These three elements make the country’s market predictable. In this way, companies can strategize and predict the future accordingly. It is precisely this stability that is the reason that cases of hyperinflation and business disruption have not been reported here for a very long time.
Favorable policy. Another benefit of registering a company in China is favorable government policies. The government continues to actively apply measures to support entrepreneurship for local and international businesses. Some of the measures taken by the government include providing grants to Chinese companies, supporting innovation and creativity, and helping young citizens. These measures have made the country an ideal destination for local and foreign entrepreneurs. Besides, the government imposes low taxes on companies, which makes it easier to do business. In addition, the tax rates of foreign companies in the interior are lower than the tax rates in major cities and coastal areas; this should stimulate foreign investment in the interior regions. In addition, the traffic policy that the government is introducing for the import of goods is favorable and continues to improve.
Excellent infrastructure. China has invested heavily in its physical infrastructure; this made the country a great place to start a business because it has excellent transport links. For example, road transport and ports are almost perfect here; this makes the export and import of goods very easy and convenient. Good road transport across the country also makes it easy to move raw materials to factories and finished products to consumers. Moreover, services are easy to offer as service providers can easily move from one location to another by air, road, rail, and sea. Plus, other essentials like water, electricity and technological advancements are nearly perfect.
Growth opportunities are essential benefits of registering a company in China. Chinese trade rules are rapidly changing policy. Some industries are not even regulated. Thus, it is almost guaranteed that opportunities will always present themselves. For example, running a healthcare and finance business over the Internet is much easier than in America and advanced economies. Minimum rules can allow you to experiment freely with ideas, giving you the flexibility to explore new opportunities. Due to unregulated sectors, this is the best time for entrepreneurs to invest in them.
Skilled talents. There are many highly qualified and talented young professionals in China. The country’s local universities and colleges produce millions of skilled workers every year. It has also become easy in China to come and work here for foreign graduates and qualified foreigners. In addition, bilingualism is on the rise, with many people in China now speaking English and Chinese. Thus, qualified employees are always available to produce high-quality products and work in China’s new business.
Favorable business environment. Thanks to favorable government policies, it is easy to find local business partners in China. As a result, this business environment is very conducive, and young people are empowering.
Starting a business in China or another country can bring its share of difficulties, especially administrative ones. If you want to test the Chinese market before setting up a separate legal entity there, other than starting a business, there is another solution to transferring salaries in China. The umbrella company acts as an official employer and employs staff solely on your behalf, and handles all personnel matters related to your employee. At the same time, you retain complete control over the latter. This way, you can thoroughly focus on your core business and growing it.

 

FAQ:

Is China a good place to do business?

China is one of the best countries to run and expand your business. The main thing is to localize and organize your business properly.

Can foreigners do business in China?

Yes, a foreigner can open a company or joint production and representative office wholly owned by foreign capital.

What is the best business in China?

There are many small business opportunities in China. The leading industries are the production of household goods, online stores, the sale of mobile phones and accessories, and accessories.

Is it hard to do business in China?

The market environment in China is completely separate from the economies of most other countries, which can be a problem for starting a business in this country. China, with its peculiarities, can become a hard-to-reach market.

What businesses are booming in China?

There are many industries in China that are showing strong growth. These include cinemas, passenger rail transport, department stores, shopping centers, online stores, medical equipment manufacturing, etc.

Is Nike a Chinese company?

Although the company was founded in the United States, Nike’s CEO said Nike was delusional in China.

How long does it take to open a business in China?

In general, we can open your business in China in three to six months. This period depends on the specialization of your business and the area in which you are developing.
 
 


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