China is on the path to becoming the largest economy by 2030, and its economic, tech and cultural influence will grow at the same pace. Since 1979 when the government of China started economic reforms, the support for businesses has been remarkable, which explains why the jurisdiction has emerged into the biggest manufacturing hub, a tech giant, and a leading exporter. No matter what angle you look at it, doing business in China is the ultimate thing.
To be successful when doing business in China, it is important to appreciate that the country is very dynamic. Most of the things that you might have been used to in the west are likely to be somehow different, which often results in problems for managers, business leaders, and entrepreneurs. To help you overcome all the challenges on the way, here are some expert tips to consider.
The main benefit of doing business in China is the large market. If your market share back home is shrinking, China has a solution. The country is home to over 1.4 billion people that you can target with your products. If your business deals with industrial-related products, the number of manufacturers that you can supply to has also been growing rapidly year after year.
Here is a summary of other benefits to anticipate when you open a business in China:
- Easy access to the neighboring markets and the rest of Asia-Pacific.
- China offers diverse opportunities for growing business.
- China has signed many bilateral trade agreements to help businesses transform into multinationals.
- World-class infrastructure.
- Educated labor.
- Supportive administration.
- Economic and political stability.
Check out the following expert tips to help you drive your business in China to success.
There are many structures that you can use when expanding business to China. For example, do you select a WFOE or wholly foreign-owned enterprise, a joint venture (JV), or a representative office (RO)? Well, you need to look at the benefits of each to make the big decision.
WFOEs are the most preferred business vehicles because they allow 100% foreign shareholding, there is no sharing of profits, and you have total control over the business operations. JVs, on the other hand, require you to enter into a partnership with a local Chinese, who must have a controlling shareholding. This means that you will have less control over the business operations.
When it comes to a representative office, it is considered an extension of another parent company back home. Although simpler to form compared to the other two, it comes with huge limitations, such as being disallowed to carry out profit-based actions. If you opt for an RO, know that it can only be used for purposes such as research, marketing, and scouting for partners.
Although China has a rapidly growing economy, you cannot just start working with anyone. From staff to suppliers and partners, it is prudent to carry out due diligence and determine the best. Due diligence can help you to avoid partnering with parties with criminal records, incapable of meeting their contractual obligations, or outright fraudsters.
While it is true that China offers a huge market, it is not homogeneous. It will be a big mistake to expect that strategies used in Guangzhou or Shanghai will work in Chengdu, Beijing, or other regions. Instead, you need to look for specific marketing strategies based on the targeted clients. To determine the area of focus, factor in the needs of the local population, develop products that solve their issues and do aggressive marketing. In addition, you need to review the competitors’ strategies in the area.
As you can see, doing business in China requires a good understanding of the targeted market. In addition to the tips we have highlighted, you also need to be patient and work with professionals. Top-rated experts, such as Hawksford, can help you register your company, craft a good business strategy, and offer guidance in the highly competitive market. The experts can also be very helpful in accounting, payroll management, filing tax returns, and carrying out due diligence.
We have discussed almost everything you need to know for doing business in China. Still, we know that when it comes to operating a business, you will have a lot of queries and doubts in your mind. That is why here we are answering some of the most common questions people usually ask.
Although there is no one blueprint for success, still here are some things you should consider.
- Choose partners wisely.
- Deal with the right decision-makers.
- Plan everything carefully.
- Understand the business environment.
- Seek professional help when required.
Here is a brief on the tips for doing business in China; we believe this will definitely help you a lot.
- Chinese business never stops.
- The ceremony is crucial.
- Business cards are must-haves.
- Professional attire is standard.
- Meetings follow strict rules and formality.
- Chinese people tend to have a reserved nature.
- Learn the customs of ‘guanxi.’