How Should You Start Doing Business in China

How Should You Start Doing Business in China

Guidelines in Doing Business in China

The ideal way of doing business in China is by using the services of an Umbrella Company. It is a legal entity that hosts you in China. It will take care of the employees or operations of your business in China. When you incorporate an umbrella company, you have a cost-effective and best way to open a business in China. When you set up your business in China, there are considerations you must make.

If you want to hire local employees for your company, the umbrella company will help you in many ways. You will get assistance in:

  • Handling the work visa procedures of your foreign employees.
  • Hiring employees based on what they need.
  • The salary, insurance, taxation, and human resource management your employees need.
  • Handling payments collected from Chinese clients and transferring to bank accounts.
  • Finding a location or office for your business.

 

The WFOE

Foreign investors in China own the WFOE. It was intended to serve as a way for foreign investors to send commercial activities in China, and it is a limited liability company, so it does not need local partnerships. The kind of service WFOE gives is allowing investors to stay in control of their company and capital management.

Foreign companies may access the Chinese market through these: WFOE (Wholly Foreign-Owned Enterprise), a joint venture, sales office, or a representative office.

 

Sales Office

When foreign companies want to get the most control of their staff through their legal, HR, and administrative departments, they need the Sales Office. It is appropriate and best solution.

The sales office is a form of local presence that is mostly used since the majority of foreign businesses only require an in-country representative/s to develop the business, brand presentation, or marketing. It is a widespread practice to depend on Chinese partners for importing, exporting, trading, and logistics. At the same time, all financial operations are controlled directly from the abroad headquarters.

 

Joint Venture

A joint-venture is when at least two parties use their resources to achieve an objective. The collective venture creation with a Chinese partner will let foreign investors use their workforce, networks, facilities, channels, and support of their local partner. They can avoid administrative problems, as well as other bureaucratic complexities. They will also have access to specific industries and sectors in China.

 

Distribution Agreement

If you want your products to reach China and then resell them, the best way is to have an agreement with the manufacturer so that it handles the distribution of your brand merchandise.

A Chinese company’s distribution agreement is the best solution if you are planning to resell your product merchandise in China.

 

Representative Office

You can use the service of a representative office to carry out specific operations. Even if this kind of activity has a limited scope, choosing this separate legal entity is a simple and low-cost solution if you want to operate in China.

 

What You Need to Know

  • Pick a business scope where you want to operate and find out if it is restricted, prohibited, or encouraged.

There are industrial sectors in China encouraged by the government for foreign investors, restricted, and industries that are prohibited, so the foreigners do not have access to them.

  • It would be best if you chose a legal firm or agency that is helpful and can counsel you in the formation process and operation of your company.

It is wrong to think that you can do it alone. To successfully open and operate a business in China, you need to find a professional that can speak Chinese fluently and is also competent in the fiscal and legal matters of the company.

 

 Necessary Documents You Need

  • The company name, and to make sure that it is not yet used, you must have the name pre-approved by the right authorities. The AIC (Administration of Industry and Commerce) in the city where you want to open the company. This pre-approval might need between 2 to 15 days, which depends on where you will apply.
  • List of controlling partners or companies.
  • The structure of management, or board of directors’ names, supervisor, legal representative, and general manager. It often coincides with the directors, and passport colour copies of everyone involved.
  • The company’s statutory address. Make sure to include the name, phone number of the land or building owner, and your email.
  • The Articles of Association.
  • The employee benefits, salary, and citizenship.
  • The registered capital and your total investment.
  • A company feasibility study. It is a business plan which also shows the investment budget to convince the authorities that your company will be allowed to open, and they also based it on the business plan.
  • Other documents they request. It varies depending on the business scope, location of your business, and sudden changes where the subject is Chinese law.

How Should You Start Doing Business in China

Business Ideas in China

Buying Websites

Like buying stocks and property, websites have a high value. Sites are being purchased and sold at hefty prices. There are a couple of factors that affect the website’s online value, like its domain name, how much traffic it receives, general popularity, and how much profit the site earns, among other factors. It is a lucrative business, but it needs a deep understanding of the market, but once you know how it works, you could potentially earn a lot of money.

Direct Marketing

Since there is a vast amount of business activities and transactions in China every day, new businesses commence operations daily. It is not hard to realize how much marketing is needed every day. Direct marketing is a top business opportunity you can have in China. Having an impressive communication skill, business networking skill, and marketing skill makes direct marketing easy and lucrative.

 

You can contact us to assist you in doing business in China, so the process becomes more comfortable for you.



Posted on June 18, 2020 by VA2 in Blog