Starting a business in China: what you need to do right

Is your home business performing poorly and you think it’s time to go abroad? It may be the other way around: your business has achieved all of the goals you set for yourself and now thinks it’s time to take on a new challenge. If you think about open a business in China, this might be the best idea in your business trip, and we’ll tell you why.

For about 40 years, China has taken a pro-business approach to developing its economy, and everything seems to be working. Its GDP is growing rapidly, the infrastructure is excellent and above all, there is a huge market. See – it has everything an investor would want in one package. So don’t be left out as others incorporate their businesses in China. As you make the bold bet to go overseas, here are the most important things you need to do right.

The type of commercial vehicle to use

In China, there are a number of business vehicles that you can use, and making sure you choose the best one is paramount. Indeed, what you can do largely depends on the type of business creation. Here are the main categories of businesses that you can register in china.

  • Wholly Foreign Owned Enterprises (WFOE): As its name suggests, this type of company is 100% owned by a foreigner (s). It gives you full control over decisions about company operations, from recruiting to product development.
  • Joint venture (JV): Unlike a WFOE, a joint venture requires you to enter into a partnership with a local Chinese to form a limited liability company. The Chinese partner is required by law to have the controlling actions. However, China discourages this type of business creation to attract more investors to the country.
  • Representative office (RO): It is the simplest type of company you can set up in China. However, this comes with a lot of limitations as you are not allowed to enter into a for-profit deal. Therefore, most of the investors prefer it for market research in China.

Taxes you will have to pay

China takes tax matters very seriously, and it is important to first understand all the obligations. Since most cities have different types of taxes, it may be a good idea to look for one with a weak tax regime. To take advantage of even lower rates, consider form a company in favored areas, away from coastal towns, and within free trade areas. If your business uses the latest technology, you could also benefit from a reduction in corporate tax.

Company formation in China

Finally, you need to get it right when registering the business. In China, setting up a business can be a long process that starts with selecting the right business name and ends with opening a bank account. In addition, you have to deal with different departments, such as Department of Commerce of the People’s Republic of China (MOFCOM), the Public Security Bureau (PSB), and the Tax Office, among others. That is why you need to identify and work with a good expert agency to help you register your business.

The advantage of having experts on board is that you will not only be helped to deal with different departments, but also to strategize for success. After helping other businesses get established in China, a good agency might be all you need to get started and grow quickly in the new market.

In this article, we’ve listed the three most important things you need to do right when bring your business to China. You may also want to include market research and competitor analysis as this will be helpful in helping you gain more market share.

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