How to do business in China is a prime consideration for investors and companies that have recognised the potential for taking advantage of what is now the world's largest economy in terms of purchasing power. But as with any environment in which the promise of reward is great, there are significant challenges to overcome. The 2017 World Bank report into conducting business across the world rated China as the 78th out of 189 economies in terms of ease of doing business. While the Chinese government has taken steps lately to streamline processes such as?business registration China?wide, there are still restrictions and difficulties to be faced. Expert advice is often needed to negotiate these.
A prime concern for many foreign investors seeking to establish a presence in China is the initial process of setting up a company in China. The Chinese government is increasingly interested in encouraging a market-based economy and has sought to remove as much bureaucracy as possible. Nonetheless, there is still plenty of red tape to negotiate and investors registering China foreign companies will inevitably require patience and expertise from experienced advisors. There are two main stages to registration. Firstly, the Ministry of Commerce must issue permission to establish a Wholly Foreign Owned Enterprise (WFOE). Secondly, the appropriate business license must be obtained from the jurisdiction within which you will be operating. The local Administration for Industry and Commerce (AIC) will grant this. Unlike the UK, company registration cannot be completed electronically. Paperwork must be submitted physically and a hard copy of the business license will be issued. While applying for a business license for doing business in Shanghai, for instance, does not sound arduous, many other certificates are required from various other Chinese government departments in support of your application. These include certifications for employing staff, importing goods, issuing VAT invoices, paying social security and so on. A?WFOE China?might need up to 12 of these certificates, depending on the sphere and location in which it will operate, and each might take around 3-5 working days to obtain. Fortunately, the government has recently combined five of these certificates into one. With the right local knowledge from a trusted advisory company, registration need not take as long as it has done in past years.
Once the process of?registration?of a WFOE or other structure in a China Free Trade Zone has been carried out, one might expect things to become simpler for foreign companies in China. However, the challenges are still numerous. Completing the laborious, ongoing administration tasks required by the government and local jurisdictions are critical to success, but also time-consuming and complex. Strict rules that govern the design, manufacture, selling, use and disposal of products are in place, for instance. What standards are acceptable in the US or UK for products are not necessarily the same as the standards that apply in China. ItĄ¯s estimated that over a third of products deemed suitable for sale in the US, for example, fail the criteria for satisfying the Chinese market. And as China opens up and its own businesses begin to trade at home and abroad more widely, there is increased competition from native companies too. In some areas, these Chinese businesses benefit from more support from Chinese consumers and preferential treatment from regulators and the courts. But there are signs that the government is keen to take further steps to level the playing field, with better protection of intellectual property being a significant feature introduced in recent years. So, while challenges still exist, so do opportunities. However, it's essential that individuals and investors wanting to know how to do business in China source the right kind of assistance from the outset. If you need to know how to smooth the path to success in this?economy, seek advice from the experts at Yaxin.
Who better to advise you on how to do business in China than individuals who have undertaken the process themselves? Here at Yaxin, our team has experience of everything from regulation and business registration China wide, to operating on a daily basis. If you're interested in setting up a WFOE to carry out trade, manufacturing or consultancy in this exciting, vibrant business economy, speak to us first. You can see details of what we do on our website at http://www.yaxin888.com/en. Alternatively, to speak to us, call 010-5747 3212 or email your enquiry to jack@86startup.com.
