business in China

When you look at the most successful businesses on the globe, the chances are that you envy them and wish to see your enterprise reach similar status. Well, one of the best routes to achieving the same success is opening your company in a high-potential jurisdiction. This should be a jurisdiction with demonstrated social-political stability and progressive economic growth. China is one country that ticks right in these attributes and a lot more.

However, opening an offshore company is never easy because you will be dealing with new markets and complex compliance requirements. These issues should not blur your focus on the 1.4 billion people market, which might be the force your company needs to succeed.

This post will demonstrate the main preparatory steps you need when planning for company registration in China.

Challenges of Starting a Business in China

The biggest challenge associated with expanding your business to China is market segmentation. Although China is a large market, pinpointing the best location for your firm is never easy. For example, do you base your enterprise in coastal cities or inland urban regions? Here are other challenges that you need to know about when registering your company in china.

  • You will require a lot of documents and present them to different offices before the certificate of incorporation is issued
  • If you select a joint venture (JV), your Chinese partner is required to have majority shareholding in the company
  • Doing business in the discouraged or forbidden industries can be an uphill task in China.
  • Policies in China can change rapidly, making compliance pretty challenging.
  • The culture in China is completely different from that of the west. For example, businesses in China are required to show a lot of respect for people’s feelings within the society and workplace.
  • Although English is fast becoming a common thing in many Chinese regions, a lot of customers still prefer using local languages. Therefore, you better be prepared by learning some Chinese or working with staff who understand it.

How to Prepare for Company Registration in China

To get it right when opening a company in China, here are some of the things that you need to do according to Adrian Cheng:

Carry Comprehensive Research about the Target Market

Like other jurisdictions, you need to start with a comprehensive study of the Chinese market to determine a number of things. First, you should identify the preferred market segment and, if possible, start interacting with it. Second, review what the targeted clients want and craft the best ways of delivering it. Third, you should check competitors so that you can craft better strategies to outdo them.

Decide the Type of Company Structure of Choice

The most preferred company structure in China is the wholly foreign-owned enterprise (WFOE) because it does not have limitations on what you can do in the licensed area. However, you might also opt to open a joint venture (JV) or representative office (RO).

Gather Enough Resources

To avoid falling off along the way, you should gather enough capital for company registration in China and possible future expansion needs. The rule of thumb is to have funds that can cater for company expenses of approximately one year or until it becomes self-sustaining.

However, we also recommend that you create new channels for raising cash to cater for short-term financial shortfalls.  

As you can see, company registration in China can be complex and it is crucial to be adequately prepared. The best way to get it right during preparation, entry and growth into the Chinese market is working with an agency of experts. These are professionals who have been in the market and assisted many firms to grow in the new market.

So, you too can be assisted to identify challenges and overcome them when getting into China. No matter which niche your company is in, you can count on experts for company registration and growth in China.