How to launch a business in china as a foreigner
There can be no denying the fact that China is an economic powerhouse, having achieved significant and consistent growth ever since it unveiled its economic reforms in the 1970s. As a result, the country is one of the most appealing business markets in the world, attracting new investments across all sectors – from the medical to the financial.
However, if you are keen to plumb the Chinese market’s potential for yourself, there are a few things to consider and several hoops you will need to jump through as you go about setting up your business.
Hone your business plan
Before we get to those all-important hoops, the very first thing you should do to try and ensure the success of your Far Eastern venture is to refine your business plan. Companies that follow detailed plans have higher success rates than those that do not, so the more you pack into your plan, the better.
As a rule, it should include everything from a breakdown of your company’s structure, to its financial projections for the coming years, details of employees and their roles, and your sales and marketing strategies, to name a few.
Choose the ideal spot
China is a vast country, with a number of cities emerging as prominent hubs of business and innovation. The most well-known are Guangzhou, Beijing, and Shanghai, but new hotspots are developing all the time, from Shandong to Chongqing.
One of the most important things to consider when choosing a headquarters for your Chinese business is the local regulations regarding trade and taxation. This is particularly important as the Chinese government tends to take a much more proactive role in how businesses operate, and in most areas of China has implemented various controls that could prove off-putting.
To avoid a number of these controls, therefore, you may wish to launch your new enterprise in Shanghai’s Free Trade Zone, which sprawls for 120sqkm. Within this zone, plenty of foreign-owned businesses are allowed to operate without paying as many taxes as they would have to in other parts of the country. There are also fewer restrictions in place for companies operating within certain industries.
These are all vital factors to consider as you go about choosing your preferred destination. However, you also need to make sure that your chosen spot is well-equipped to meet all of your company’s needs – from staffing requirements to logistical arrangements.
Register your business
Once your plan is set up and your perfect headquarters has been located, it’s time to start the exciting process of registering your business. This will require filling out various forms. If you need any assistance with the Chinese translation of important documents, you can find a reputable and efficient Chinese translation service that offers multi-sector expertise and can provide accurate high-quality translation as well as interpreting services if need be.
During this process, you will need to decide on your business’s legal structure. For example, perhaps you wish to register as a Wholly Foreign-Owned Enterprise (WFOE), which includes LLCs. This kind of structure gives you almost the same rights as a local business owner would have, which is one of the reasons for its popularity among foreign investors.
However, there are some disadvantages to registering as a WFOE, such as the complexity of the registration process, and the necessity to annually report your financial books to the government. As a result, you should do your research on the different legal structures you can choose from and the pros and cons of each before you begin the formal registration process.
Apply for certificates and licenses
Before you can begin operating your business in your chosen part of China, you will also need to apply for the appropriate certificates and licensing.
To obtain an approval certificate, you will have to go through the Ministry of Commerce and the State Administration of Industry and Commerce. These are the entities that will be considering your application, and they will let you know whether or not it has been approved.
You will also need to apply for licenses appropriate to your industry, particularly if you work in the food and drink sector, or in manufacturing, construction, or telecoms.
Set up a business bank account
Now that your business is growing nearer to completion, it’s time to set up an account. This can be a more complex undertaking than you might expect, requiring a variety of details, some of which may differ from one location to another.
In general, however, you will need to provide the following:
- Proof that your business has been fully registered, including the aforementioned licenses and approval certificate.
- A company chop; the Chinese equivalent to a signature, this seal or stamp is vital for validating your business’s contracts.
- Identification for all of your company’s representatives, including directors and principal shareholders.
- Details of the company structure.
Of course, if you already have a bank account with one of the foreign banks that have branches in China, such as Citibank or HSBC, then you may not even need to open a new account. Instead, it may be possible to simply transfer your existing account to your nearest Chinese branch.
Register your trademark
If you already have a trademark filed in another country, the bad news for your Chinese investment is that China will not recognise it.
Instead, you will have to select a new trademark and register it, along with any other patents, in Chinese. Once again, you may need to use a reputable Chinese translation service to assist with this.
Among your options, you can select trademarks that feature any symbol or logo that refers to unique products provided by your company. This means any unique letters, words, or designs related to your company; and particular colour combinations that can be linked to your products or services.
Hire local employees
Once your business has been formally registered and recognised, it’s time to find local employees to help you on your journey toward achieving corporate success in China.
Hiring Chinese staff will bring you a number of benefits, including in-depth knowledge of the local market. However, because there are so many foreign investors setting up their own brands in China, the competition for talented local workers can be fierce.
You may wish to consider using a Chinese recruitment agency to help you find the right staff for your business. This agency can take care of various aspects of the hiring process, from conducting interviews to taking care of the administrative aspect of taking on new workers.
