Starting a Business in China as a foreign national: What You Need to Know

by Startacus Admin

China is known for its wide variety of industries, growing business market, and increasing spending power, making the country one of the most enticing business spots in the world for entrepreneurs. With many business owners from across the globe setting up their own company in China, it’s important that you do your homework first before launching your brand.

Whether it’s knowing government regulations, picking the right location, or developing a solid business plan, here are some handy tips you might need to know before starting a company in China as a foreign national.

Of course, below you do decide to set-up a base, make sure you get appropriate legal advice and feel comfortable that you know the benefits and potential isssues that might arise. 

Do Your Research

There are already many successful business owners from the United States who have set up operations in China, so your first step is to speak to those in the know and ask them for guidance and support on how they have managed to succeed or what errors they made along the way.

Visiting China and starting your networking journey at local trade shows can be a great way to build valuable connections that will prove beneficial when spreading brand awareness. The Chinese government has published a five-year plan which outlines what kind of businesses they are seeking, so choosing a field that will be profitable is key.

Choose a Suitable Business Location

China is one of the largest countries in the world, so finding the right business location can be challenging. It’s advised to begin with getting to know the big cities like Beijing and Shanghai, especially as they are the major government, industrial and business hubs. If you are planning to run a tech business, Beijing may be the perfect spot for you.

Before choosing to do business based in China or anywhere else for that matter, make sure to visit  support services like nhglobalpartners.com where you’ll find more advice on how to pick the right location for your company. Whereever you go, you'll need to work with experts in navigating some of the difficult challenges that international businesses face.

Pick an Entity Status

Before registering with the Chinese government, you need to choose which kind of business entity to register. The most popular choices for foreign companies are joint ventures, representative offices, and wholly foreign-owned enterprises. However, they all have their advantages and disadvantages. Joint ventures require partnerships between a Chinese citizen and a foreign business owner, whereas a representative office is an easy, cost-effective option. A wholly foreign-owned enterprise tends to be the most common kind of entity, which will give you maximum quality control.

Develop Your Business Plan

Devising a thorough five-year business plan is critical for the success of your company. Once the Chinese government has approved your plan, you will be restricted to what is set out in your guidelines. If you begin offering products or services that aren’t outlined in your business plan, there is a risk that your business could be shut down by the Chinese government. Your business plan should document your location, descriptions of your products or services, the number of employees you expect to hire, as well as projected revenues.

Find a Liaison

Regardless of how much knowledge you have in running a business in China, it’s vital that you consult a representative who will register your company. For example, if you are from the US there are many organizations across the US that can help guide you through the complicated application process. It’s recommended to contact the U.S China Business Council who can assist you. Finding a qualified liaison is essential, as they can give you advice on where to register, whether it’s the national, provincial, or local government.

Trademark Your Intellectual Property

Foreign investors in China need to be careful of intellectual property violations. Again using the US as the example, there are lots of manufacturers in the United States who believe that because they have trademarked in their home country, it will be valid in China, but this is not the case. If you want to set up a business in China, the first individual who registers a trademark is given the rights to it.

Use a Recruitment Agency

When it comes to seeking employees and managers for your business, hiring in China can be a tricky process. Don’t just assume that because an individual is fluent in English, they will be able to run your company properly. While their language skills can be hugely beneficial, it’s much more important to find a smart business person who can run your enterprise exactly how you want it. You may benefit from using a recruitment agency who can work alongside you to find the right candidates for your business.

China is one of the prominent global economic leaders, and with the country now being open to international trade, business minds from overseas are seeing the advantages and opportunities that can be gained from running a business in China. Before you get started, make sure that you read all the guidance above, which should reduce the risk of any errors when getting your company up and running.

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Published on: 6th August 2020