Business China

Starting Business China: Challenges You Should Anticipate

+86-020-2917 9715
Starting Business In China

Operating in China, without owning a legal business entity, can be tricky to say the least.

The 2018 World Investment Report published by UNCTAD states that China was the second largest FDI recipient in the world—after United States and before Hong Kong.

The Asian giant’s economy was ranked “the second most attractive to multinational companies for 2017-2019, after the U.S.” FDI inflows in the country witnessed a rise of $3 billion in 2016–2017, going $133 billion to $136 billion. This was largely due to liberalization and free trade zones.

Seeing the influx of foreign investments, the Chinese Government has increased scrutiny. Starting a business in China involves more than simply getting Government approval and a business license. Businesspeople face many complications, while forming and running a business in China.

Common Problems Of Starting a Business in China

Cultural Difference

Sensitivity to Chinese culture is crucial for your business success. Chinese corporate culture offers great respect and authority to organizational hierarchy. Leaders expect a certain level of obedience from their subordinates. Pointing out mistakes of a manager in front of his/her subordinates might be acceptable in the U.S., but in China, it may be seen as a sign of disrespect. Acknowledge hierarchy, show respect and conduct business in good faith when in China.

Expecting quick results

company registration

Be patient! Business operations run a little slower in China than the rest of the western countries. Therefore, it’s necessary that you avoid switching partners or suppliers, just because it’s taking too long for the deal to close. Chinese business community likes to develop a trusting relationship, before getting into a business agreement. If you’re getting invitations for drinks and dinner, consider it a milestone in your business development endeavors.

Cost of doing business

You might have landed in China to profit from affordable operational cost. However, being a foreign company, you will be required to pay additional expenses. Since 2010, foreign companies are required to pay education and urban maintenance and construction taxes. Furthermore, international companies are paying higher insurance coverage to employees, since the change in Social Insurance Law in 2011.

Keep all these setup costs in mind. Venture into the Chinese market only if your business can sustain these expenses in the long-run

The Role of Government

Chinese economy is a byproduct of a planned economy. 76 percent of assets are owned and controlled by Chinese government. This means that government policies directly impact business revenue and efficiency. However, after signing the World Trade Agreement, Chinese government has opened doors for foreign investment.

Determining the nature of business entity

You might be tempted by the zero-tax policy, but there is a cost to setup a company in China. Foreign investors often forget that WFOE registration requirements are extensive and time-consuming. Moreover, operational expenses and registered capital requirement to keep a China WFOE running can be quite expensive.  Determine the type of business entity—WFOE, Representative Office or Joint Venture—you want to form in order to enter the market. Seek advice from a local business consultancy to simplify the registration process.

Business China can help you with the registration process. We make sure our clients can set up WFOE, Joint Venture, or a Registered Office without any hassle or legal issues. Leave all the documentation and government correspondence to our local experts and focus on running a dynamic business in China.

Email us your business plan and we will guide you with the setup process.

In addition to registration and incorporation of foreign businesses, we also offer premium accounting and company management services to all our clients. Call +86-020-2917 9715 to avail our services.

  • 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.