Starting a business in a foreign country is always difficult. You must contend the language and cultural issues that will always slow you down and cause misunderstandings and stress. Then there is the regulatory hurdles that you must overcome. In the end it can all get pretty overwhelming.
When that country is China, both of these issues are exacerbated because the country is in the midst of major economic and legal shifts. The best approach is to have a clear understanding of what you need to do in order to create a business there. Here is a guide to navigate many of the important issues relating to starting a business in China.
Do Your Research
There are major differences between doing business in China and most other places so you need to do your research to understand how things go in this fast changing country. One thing you can count on is that the amount of foreigners setting up businesses in China is growing every year and so any roads you go down will likely be well traveled.
Use the Internet to look at reputable government sites in China where you can find out what you need to do. Also join foreign business groups on places like Linkedin and discuss with people there, what they went through and challenges they faced. Remember often times issues that are important regarding your setting up a business may not be obvious.
Speaking with others who have done it already can help you to anticipate any unforeseen issues. In addition this can set you up with friends in the country with whom you can network.
You should also connect with a few liaisons in the country who can help you to understand how things work and position your business properly. This means hiring a Chinese law firm to assist you. Contact the U.S.-China Business Council, or the US Commercial Service who can direct you to a trustworthy international corporate lawyer for you.
Visit a Few Different Cities
They might be a good reason why you are setting up your business in a specific city in China. Perhaps that is where your manufacturing is located, or a strategic partner that you will work closely with. But you need to visit that City before you put down your business roots.
The only way for you to discover this is to travel to that City and spend some time there. Remember you will not only be working in that City but you will also be living there. So making sure that it is a place that you want to be, is a very important aspect of you are setting up your business.
Pick the Right Type of Business Entity for Your Company
China has several different types of business entities that you can choose from. The most common for foreign businesses are wholly-owned subsidiaries, joint ventures, and representative offices. Each of these works well for a specific purpose but you need to study the elements of each in order to determine which entity works best for your particular business. The best approach is to hire a company to help you set up your business entity in China.
You will also need to find a good international bank and a company to help you hire staff. You can do these things once you have settled the issues listed above. The key is to be patient and think like a CEO starting a new business. Remember China is still in many ways not caught up with western countries. So be prepared for things to move more slowly and take lots of additional time and potential do-overs. In the end though, you will get it done and soon you will have your office in China.