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10 things you MUST know before starting your business with China

  1. A profound planning is a must

Have you calculated all the costs? Set up costs, rent, HR costs, accounting, taxes, marketing etc. etc. Be sure your funding is sufficient and cash flow will not have any problems. As a rule newly setup companies do not generate much profit in the beginning so you might want to make a careful marketing research beforehand.

Is your product competitive on a Chinese market? Such cities as Shanghai and Guangzhou have a large population and might look as a very attractive market, but there is abundance of suppliers and competitors as well. On the other hand, consumers are more progressive and open to Western products there, so be sure your product or service is adapted to local tastes of a targeted area.

  1. Your choice of a legal entity is crucial

Companies in China can operate strictly within their registered business scope and accordingly with their type of a legal entity. Make sure your product or service is allowed to be sold in China and state your business scope as detailed as possible. Are you going to make business in China or just explore the market and find suppliers? Depending on the goals your business pursues in China, you can choose one of the following options :

  1. A Wholly-Foreign Owned Enterprise (WFOE)
  2. A Joint Venture (JV)
  3. A Representative Office (RO)
  1. Location matters

The taxation and regulations for companies vary in different geographical locations. You have to know why you decided to set up in a certain area. If you are looking for a developing market and less costs, stay away from developed and costly big cities. Are you interested in high-tech and industrial parks? Jiangsu or Zhejiang provinces might be right for you. Are you setting up an import/export business or looking for a huge market open to Western products? Shanghai will suit these purposes. Check out the benefits of Chinese Free Trade Zones where companies can store inventory in bonded warehouses without paying duty and trading is greatly simplified trade in many ways.

  1. Your company’s intellectual property should be protected

As a business owner you want to keep your intellectual property secure. Be aware about the Chinese IP rights including patents, trademarks and copyrights. China recognizes only registered trademarks rights and if you want to sell on e-commerce websites like Aliexpress and TMall or via a local distributor, the first requirement is to register your trademark before any trade takes place.

  1. An online presence is vital for your business

Your distribution strategy is what will define the success of your business. Sure you can partner up with local distributors and open brick-and-mortar stores, but that should be just a top of the iceberg. E-commerce is a major way to sell everything in China now. Creating a user-friendly website is a basic requirement, what’s more important is to realize that Chinese digital platforms are totally different from the rest of the world. Weibo, WeChat, Baidu, Youku and many others – should be your new advertising channels.

  1. Take care of your visa

Depending on how you see your presence in China as a business owner, you should consider your visa type. Will you be managing your company from abroad and just coming occasionally on business trips or will you execute the job personally in your office in China? Check out what visa type suits your purposes better, perhaps you would want to use the advantages of a new visa policy for business owners in China.

  1. Be a responsible employer

Setting up a company means that you are going to deal with HR and it will bring certain challenges. To be aware of ever changing regulations, language and cultural barriers, labor costs and organizational development in China is a complicated and challenging task. In general Chinese employment laws protect employees and in most cases it is better to outsource a local HR company to will help you save more money and develop your business successfully.

  1. Know the culture in China

However developed and progressive China is, it is a foreign country with its unique traditions and ways of doing business. It is all about connections and keeping face in China. In order to expand your network and gain an advantage for the growth of your business, try to learn more. You will find it useful to know how they exchange business cards and conduct negotiations, bargain and make lifelong partners in China - it’s all about how open you are to embrace a new culture.

  1. Get external help

The question of entering the Chinese market is quite serious. Obviously, it requires a thorough research and expert advice. Mastering business in a new country is a difficult task and a well-chosen local partner can be critical to your success. Opportunity Guide can help you with taxes, duties, regulations, company setup, HR, accounting, logistics and everything your business needs to be a success in China. Feel free to reach out and ask for a business advice anytime!

  1. What else do you want to know about business in China?

Leave a comment below and we will post more information for you!