Increasing number of American companies are setting up their own presence
in China in order to source products or services directly from China or
enter the Chinese market rather directly. Nevertheless, given the foreign
nature of complex local policies, regulations and overall business environment
in China, it is so critical to be proactive and fully prepared before you
take the strategic move to setup a business to start your business's own presence in China.
Setting up business in China is a big project by itself, which may require financial
and time commitments, business management knowledge and China business expertise.
Identifying a competent agent to manage the complex process of setting
up business in China will be a cost
and time effective way to avoid potential pitfalls. Amlink International
can help you to setup and start a business in China. We offering
comprehensive business consulting services, and through
this website, provide in-depth information and resources on how to
set up a business in China. Here are key points one should and must know
before starting the process of setting up a business in China.
There are several options to set up a local presence in China. Foreign entity's
China presence may be in the form of a wholly owned foreign enterprise,
an equity joint venture, a contractual joint venture firm, a representative
office or a local representation by a third party such as local secretary
services and local representation companies.
The business scope should be clearly defined for the China presence. China
National Development and Reform Commission (CNDRC) may prohibit or restrict,
permit or encourage business setup based on the scope of the business to
be setup. It is important
to carefully define the scope that is to be encouraged
to set up a business in China.
It is important to select the right location for your China operation.
Although in general China central government has abandoned its
preferential tax rate for foreign invested companies starting January 1,
2008, some cities, especially
still offer various tax benefit and financial assistance for foreign
investors. It is always a good idea to setup a business in the area
where tax benefits are offered.
There is a minimum registered capital requirement for setting up business
in China. Different business types will bear different requirements.
However, such requirements could be flexible. In some case, local Industry
and Commerce Administrations may decide on your minimum registered capital
based on their judgment of your business scope and operation scale. You
should find out the specific requirement for your business setup before
taking further actions in case they require an amount exceeding your financial
resources available for setup business in China.
You should fully understand employer's responsibilities and liabilities
in China. China just issued a new labor law in year 2007, clarifying several
key issues such as employment contract, redundancy, etc. Without preliminary
knowledge of this law, you may end up spending a huge amount of time and
money terminating the contract with under performing employees, as the structure
of the contract was wrong. You also need to be aware of the mandatory employee
welfare and benefits so as to include such cost in the budget.
You should conduct thorough due diligence and credit check on joint venture
partners if the business is to be set up in a joint venture format. China
has some sort of the business culture to show people's wealth and status
by driving luxurious cars, wearing prestigious watches and owning an impressive
factory. So your business partners in China may look financially viable
and well connected but actually live on bank loans and personal debts.
You should plan to develop a comprehensive local business and human resources
management system. It may be a tough job to recruit the right employees
in a foreign country without local assistance. It is even tougher to effectively
manage the local business and staff in a foreign country. A sound and robust
employee management system will encourage the engagement and commitment
of local staff and avoid potential risks. You may include reporting and
communication policies, staff training, performance assessment, remuneration,
career management and employee management manual in the system.
Authorities in China
relating to registering business >