Business China

3 Things Startups May be Doing Wrong in China

+86-020-2917 9715
WFOEs and FIEs setting up businesses in China

China’s economic growth has been tremendous over the past year, despite the country facing ups and downs. From startups to multinationals, foreign enterprises in China have even witnesses an affirmative transformation in trade laws, registration requirements, and investment restrictions in industries that were off-limits to foreign investment before.

However, despite the changes, the fact is that not every foreign invested enterprise (FIE) established in China can succeed. Seasoned multinational corporations have suffered huge losses in the Chinese market, so it's no surprise that many startups end up facing the same fate.

Starting a business from the ground up can be challenging in a familiar environment, much less a foreign country. Even the ventures with solid business ideas can easily falter; from the inability to manage cash flow and weak management to poor product development, operational errors and financial troubles, failures occur for a number of different reasons.

Since trends in China are considerably different from the rest of the world, some reasons for potential failure are also unique. Today, we’re looking at the top three.

1.Consumer Behavior

Understanding consumer behavior is complex, to say the least. Consumer behavior not only varies across every region and state, but is also different across age groups, gender, class, and industries. As a startup, deep insights into consumer trends can make or break your business.

Chinese consumers, overall, are different from those in western cultures. Consumers who have grown up in the socialist system have completely different values, may be more price-sensitive, or may have concerns about foreign firms as opposed to state-owned enterprises that offer better benefits and pricing systems.

Many foreign startups fail to address these considerations—and Chinese history—which leads to immediate failure.

2.Market Conditions

Not all industries are open to foreign businesses in China. Some industries—such as healthcare and construction—offer more opportunities to foreigners, whereas others have significant restrictions in terms of foreign investment. This means that startups need to choose their business scope in the Chinese market carefully.

Investing without understanding the market and the associated obligations can limit an FIE’s tenure in China to just a few months, and can also land them in hot water with the authorities.

3.Cultural and Linguistic Differences

WFOEs and FIEs setting up businesses in China

Identifying cultural differences between your home country and China is the first step in the right direction. Acknowledging these differences can help startups deal with their domestic counterparts effectively during company meetings.

Understanding the context of conversation also requires command over the language that many foreigners in startups don’t have. This can lead to serious misunderstandings that can have an impact on the business and its standing in the market.

To deal with these constraints, startups and multinationals can talk to us for expert help. We offer multifaceted lingual, legal and management services to WFOEs and FIEs setting up businesses in China.

Know more about our work here or get in touch at for professional guidance.

  • James Oliver "True professionals, very helpful and dedicated. Your support team is fantastic."
  • Robert Gatti "Our advisor was brilliant and we were given more help that we knew we needed. What I liked most about Business China's service was the prompt and businesslike approach.It helped us dramatically. At a...
  • Vivian Belfanti "Quality work and friendliness is why I chose to work with Business China. Business China is organized very easy to work with."
  • Tim Orchard "Thanks to Business China’s professional guiding and efficient processing about company incorporation and VAT refunding, our new entity in Guangzhou already step into a virtuous circle. I have to say...
  • Victor Declety "Business China allows us to focus on our customers instead of being tangled into enterprise level business incorporation and maintance."
  • Ben Hunter "Business China is helping people who don't necessarily know how to connect your current business with the booming Chinese market and how to lay out your 'China Dream' here specifically. It has been...
  • Daniel Wong "A great customer experience! The flexability and speed of response from the account manager, as well as the quality of the service process was exceptional."
  • Stacey Morris "Businesss China has been superb. Their customer service is great. The guys there respond very quickly and go above and beyond that help."
  • M. Salem Having real-time information allows us to deal with issues immediately before they become problems.We are satisfy with Business China.
Request a Proposal

Drop Business China a quick message to let us know about your incorporation needs.