How to start a Business in China (Part One)

How to start a Business in China (Part One)

Blog, Business
12/01/2021
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Business in China is booming, so why not start your own?

In our previous article, we gave you some tips on how to find a job in China. However, in today’s article, we’ll be giving you some advice on how to start your own business in China.

Business in China: Do Your Research

Market research is essential for helping you determine whether your product or business will sink or swim in the Chinese market. One common error is assuming that if a product will do well in American or European markets, it will do well in China. If you want to avoid failure, then read our article about common brand mistakes in China. Don’t have a business idea or product? No worries, market research can also help you determine profitable avenues.

Another important topic to research is the location of your business. Consider which locations allow you the best access to resources. Depending on your business, you might want to be in an international city like Shanghai which is great for growing your talent pool. However, if your business relates to manufacturing you might want to consider Guangzhou which is also known for its low cost of living.

Business in China: Create Your Business Plan

Regardless of where you want to set up your business, you always need a good plan. A good business plan should cover your strategy for entering the Chinese market and a strategy for marketing your services. If you are new to the world of business this may seem like a daunting task. However, there a variety of consulting services in China, and abroad, that can aid you with creating the right strategy or you.

Business in China: Register your Business

How will you legally register your business in China? One of the most important things that you will need to do is pick the right structure for your business. This will define how your business legally operates in China. Here are some common options:

  • Wholly Foreign-owned Enterprise (WFOE): a WFOE is the most common way for foreign businesses to register as it is for companies whereby all the shareholders are foreign. Various businesses are eligible to register as a WFOE. This includes consulting, manufacturing and trade. However, when it comes to manufacturing and trade you have to ensure that your products aren’t in conflict with prohibited items on the Foreign Investment Catalogue. The Foreign Investment Catalogue provides a list of prohibited and encouraged industries for foreign investors.
  • Joint Venture (JV): pursuing a JV in China means that your business is backed by Chinese investors who will aid with running costs and management.
  • Representative Office (RO): registering as a RO limits your ability to make a profit. Though easy to set-up, the only business activities that you can conduct are market research, advertising and publicity.

 

This concludes the first part of our guide on how to start a business in China. Join us next time as we go over how to assemble the right team and find the right consultants for your business!

 

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