China business startup is one of Tannet’s business incubation services, China developed very well in the past few years and most of foreign investors come to China for business opportunities, in order to help the foreigners to start up the China business very well, we've mapped out the 10 steps you'll need to take to get there.
1. Do your homework.
You're not the first one to break into the Chinese market, so you don't have to learn the tough lessons the hard way.
Talk to people who have opened offices in China. Ask them how they succeeded and especially how they failed. You are advised that you should travel to China and start networking at local trade shows, as relationships are crucial to doing business in the country. A calendar of trade shows is available here.
Make sure you're informed about the state of the industry you're in. A lot of this research can take place from your own home. Check out the five-year plan that the Chinese government publishes, which details what types of businesses they're looking for.
2. Pick a location.
At this point, you have an entire country at your disposal, but you can't set your business down just anywhere and expect to be a success.
First, get to know the big cities. Shanghai, Beijing and Guangzhou are the major business, government, and industrial centers. The very nature of your business may require you set down in one of the big cities. If you're a tech company, for instance, Beijing may be the place for you. Find out where the action is happening in your industry.
The major business centers aren't your only options, either. Some companies find moving inland to be the better bet. if you're selling goods rather than services, to determine how near to or far from the coast you need to be:
a. What are your transportation needs?
b. What are your logistical needs?
c. Are you relying on goods that may be imported to China?
d. How can you get the goods from the port to your location?
e. What government inspections and restrictions will you be subject to?
Once you've settled on a region, you have to find an office, since you'll need proof of a lease to register your business. Find office space through a realtor, just as you would back home. Whatever space you choose, though, make sure it is zoned for the type of business you're planning on opening.
3. Choose an entity status.
Before you register with the government, you need to decide what type of business entity to register. The most common for foreign businesses are joint ventures, representative offices, and wholly foreign owned enterprises. Each, of course, has its pros and cons.
A joint venture requires a partnership between a foreign business owner and a Chinese citizen. Though joint ventures may sound like the safest route, experts warn against them. Critics say the most common problem with joint ventures is no more than a classic case of "same bed, different dreams" syndrome.
Representative offices are an easy, low-cost way to go, but it drastically limits the scope of what you're allowed to do in China. As Yang says, "A representative office is just there to represent your offshore entity." In other words, you cannot deliver any services or products, which means you also cannot generate revenue. A representative office affords you little more than the ability to show your face and build your brand name.
The most common type of entity, therefore, is a wholly foreign owned enterprise, known as a WFOE. It gives business owners maximum quality control.
4. Develop a business plan.
A detailed five-year business plan is crucial, because once the government approves it, you will be able to operate only within its guidelines. If you start offering a product or service that is not in your business plan, the Chinese government can shut your business down. The same goes for where and how you operate.
While it needs to be broad, it should also be specific. Make sure you include your location, projected revenues, product or service description, expected number of employees and budget requirements in the plan. It's also wise to tailor your plan to China's five-year plan.
5. Organize the necessary documents.
"There's the written laws in China and then there's the reality on the ground," says Harris. Nowhere does this theory apply more than when it comes to what documents you'll need to register. Though the documents you'll need to register for a WFOE will vary from place to place, you can find an extensive list of what you might need, here.
Application forms may also differ depending on who you're dealing with, usually some of the documents are required to be notarized by the foreign local notary public and endorsed by the China Embassy in the foreign
7. Trademark your intellectual property.
Intellectual property violations are a big issue for foreign investors in China. Many U.S. manufacturers believe that because they have a trademark at home, it will hold up in China, but that's not the case. In China, the first person to register a trademark owns the rights to it, regardless of whether or not that person is the first person to use the trademark.
8. Find a bank.
This part should be quick and easy, since there are plenty of banks with a huge presence in China. Try HSBC, which is based in Hong Kong, or Bank of America, which you can find all over the country.
9. Hire a staff.
Hiring in China is a delicate process, especially when it comes to hiring managers. Don't assume that just because a person's English is impeccable they'll be able to run the business properly. There are other options, of course. Try reaching out to human resources consultants and headhunting agencies in China, and don't disregard American-born Chinese or Chinese citizens who were schooled in America, either.
Once you have trusted managers in place, they should be able to assist you in hiring the rest of the staff. Remember, though, you need to have a contract for every employee you hire, as well as an employee manual.
10. Take it slow.
Now that you're all set up, you have to manage expectations. Don't jump into quick business deals just to turn a profit. It takes time to build business relationships over there. "It's much different than the U.S. in regards to the amount of time that's spent developing the business relationship before the actual deal is consummated," says Wong.
What will win you success in the Chinese market is patience. "The Chinese have been doing business in a certain manner for thousands of years. Don't even start to think for a millisecond that you're going to change it."
Tannet’s Turnkey solution starts with first analyzing your business scope and operation and then strategizing the best legal and marketing path forward, and its services include:
1. China Market study and China business plan;
2. China Company Registration, company formation;
2. Registered address and Virtual office;
3. Taxes and accounting services customized to our client’s business needs;
4. HR management and Payroll services.
Contact Us
If you have further enquire, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com.
Previous：China Employment Agreements
Next：China Free Trade Zones Overview