China is, without a doubt, the place to be as far as investments are concerned. For entrepreneurs, China offers the opportunity for rapid growth of their enterprises, not just locally, but also the rest of the Far East. However, many people still find it challenging because of the complexities involved in registering and managing various executive functions of a business in China. The good news is that you can avoid these complexities and take your business to the next level by working with experts.
In this post, we provide you with a checklist of the things that you need to make your enterprise successful.
Before looking at the key items that you need to check when expanding your business to China, let’s start by taking a closer look at the numbers that make the country to stand out:
- The nominal GDP of China, according to the 2021 estimates, is US$16.642.
- China has the second-biggest economy on the globe when measured by nominal GDP.
- When the economy is measured based on Purchasing Power Parity, China has the largest economy since 2014.
- The service sector in China contributes the largest portion, 51% of China’s GDP. It is followed closely by industry (40.5%) and agriculture (7.9%).
- Private businesses and investment accounted for about 60% of the country’s GDP.
- In 2020, exports from China reached US$2.59 trillion, with manufacturing accounting for 94.3% of the exports (check here).
- The population of China is over 1.4 billion, according to the 2021 estimates.
A Checklist for Doing Business in China: Here is What You Need
When considering doing business in China, one of the most important things is the company structure. The first choice of company structure for foreigners coming to China is a wholly foreign-owned enterprise (WFOE). Additional options you might also want to have a look at include joint ventures (JVs) and representative offices (RO). Here are other vital components you should check include:
Market Segments of Interest
China is a highly diverse jurisdiction, and your business needs to be clear on the targeted segments. Some companies make the mistake of taking the view that China is a homogenous market. Therefore, where do you start? Some good targeting when doing business in China might include urban population, rural population, industrial niches, export markets, medical equipment manufacturers, and financial companies.
Understand the Foreign Investment Regulations
In China, just like other jurisdictions, there are different laws that businesses need to follow, and it is crucial to understand them. For example, China is very strict on accounting and tax matters, and you need to understand related policies. For example, you need to understand and apply the Chinese Accounting Standards.
Taking Advantage of the Regional Market
One lovely thing about China is that it is always looking for ways to help businesses grow rapidly not just locally but also regionally and globally. For example, it recently signed the Regional Comprehensive Economic Partnership (RCEP), which brings on board top economic giants, including Japan and South Korea.
China has also signed multiple bilateral trade agreements, allowing you to take advantage of other markets in Asia-Pacific (APAC) and across the globe. This means that getting into and doing business in China is like flinging open the doors to global market access.
As you can see, China is without a doubt a high-potential investment destination, and you should not shy away, but all the things that must be put together plus compliance are challenging. From company incorporation in China to efforts to take advantage of bilateral agreements is never easy. However, you cannot give up on the potential for your company to grow, and this is why you should work with an agency of experts. These professionals can assist you with everything you want, from company registration and structuring to executive functions like payroll management and filing tax returns.