Business in China

The fact that China will (and maybe that it already is) the next big power of the world when it comes to economy is already a thing that belongs to folk knowledge. However, this time though, “pop culture” may not be as wrong as you may think and China may actually be the very best place to invest your money in. If you want to learn how to invest in China, then read on and acquire as much information as possible on this subject.

The Most Important Tips on Investing Money in China

Before you even think of the type of investment you should be making in China, think of your budget and of how much you can afford at the moment. Further on, make sure to get together all of the capital you have available. Only then start researching about the best ways to invest in China.

There are multiple options when it comes to China investments and you will have to consider them all before settling for one (or for more of them, if you believe that would be more advantageous). For instance, you could invest your money in mutual funds, but that may not be extremely profitable if you take into consideration the fact that the management fees and the expense ratios can get quite high. On the other hand though, ETFs may be a much better alternative because they have a low commission.

Furthermore, China has become much more open to foreign entrepreneurs and it is nowadays easier for people from the Western world to actually open a business in China. Of course, you will need a lot of information and you will have to do your “homework” thoroughly, but ultimately it will be much less difficult now than it was a few decades back (and this is largely due to the fact that more foreigners have managed to enter the Chinese market and they have “cleaned” the pathway for future entrepreneurs as well).

How to Open and Run a Business in China

To start a business in China, you will first have to make sure that the company will be approved by the Chinese government. That means that you will have to do a thorough research on what they need and you can do this by reading their 5-year plan, which is published officially. In there, you will find precious information on the kind of business they want to attract in the country and on how your business idea would fit there. Ultimately, as long as you are along the 5-year plan’s lines, you will get approved because the Chinese government wants to attract quality entrepreneurs in the country and it wants to create good jobs for its people. Once you have done this, you need to make a business plan that is in concordance with the 5-year plan made by the Chinese government. In the end, this is the document that will convince them to approve you.

Also, you will have to make sure you choose the right type of entity for your business. In China, foreigners have the right of opening 3 types of business: a joint venture, a representative office or a wholly foreign owned enterprise (WFOE). Although the first option may seem the best route, the truth is that you may not want that and that your business may fail due to the fact that you and your Chinese partner may have a different vision on how to deal with certain business-related things. Since representative offices are very limited and they are only to legalize your offshore presence of an already existing foreign company, the most popular choice when it comes to the entity of the foreign businesses in China is the WFOE and you will want to focus your analysis on it as well.

The legal and bureaucratic procedures are not that difficult to follow either. Basically, you will have to pre-approve your company name and then you have to make a deposit to a bank there of the minimum capital (this is usually $15,000, but big cities may ask for a larger minimum capital). Further on, you will have to obtain the verification of this capital from an auditing firm. Next, you will have to apply for registration certification with SAIC.

Also, you will have to be approved by the police department to make a company seal. Once this is done, you will make the company seal and you will pay the fee for the organization code certificate you will receive. You will also have to register with the local bureau of statistics and you will also have to open a bank account of the company (and transfer the capital you have previously deposited). In China, you will need to have authorized invoices so you will have to apply for this kind of approval as well before you purchase the uniform invoices. The last steps of opening a business in China will largely be related to your future employees: you will have to file a request with the local recruitment service center and you will have to register with Social Welfare Insurance Center within 30 days of opening your business.

Do bear in mind the fact that the location of your business will be very important. The largest cities in China (Beijing) may be a great idea, especially if you are in the service-providing or in the IT industry. However, if your business focuses more on goods and selling them, you can try to go inlands as well, but before you do that do make sure you analyze every detail (from transportation needs to the economy of the area).

The most important thing is to research everything beforehand and to make sure that all of your paperwork is in order. As mentioned before, the Chinese are open to foreign entrepreneurs, but you will have to prove your idea is worth their attention. Focus on the details and stay positive –  by reading this, you have just made the very first step to opening a business in China!