The consumer market in China has proved great growth potential in every industry. That means that the country is a great choice for any person planning to expand his/her business overseas. The country has adopted many pro-business policies that have facilitated the growth of companies in the local market and the other countries in the Far East. It offers awesome incentives, a supportive regime, good inland container depots (ICDs), an educated workforce, a large market, and seaports.
Further, it has been growing steadily within the last few years and by the year 2020, it ranked among the largest economies in the globe. The GDP ranked second after that of the United States. When it comes to opening a company in China, the first step is registering a company. Unluckily, the process can be challenging for foreigners. This guide will help you complete it smoothly.
The decision to expand your business to China
This is the first step for people working to expand their business to the Asian country. The decision triggers many activities aimed at helping you grow your enterprise. The process of registering a company in China and growing it is similar to what you expect in your home country. Here is a list of some of the things you should do when in this stage.
- Preparing enough capital for the new venture
- Choosing the business location. Think of the ideal China region for your business.
- Decide on the market to target. Base your decision on the nature of your business. Some people will target healthcare, telecoms, hospitality, and manufacturing.
Pick the business formation
After making your decision to invest in China, raising the capital, choosing the location and market, you have to choose the right business formation. Business formation is important because it defines your control over the decision-making. Here are the main types of business formations in China.
- Wholly Foreign-Owned Enterprise (WFOE)
After choosing this business formation, you will own 100 percent of your business in China. This form of business is structured more like a limited liability company. One of its benefits is that the owner has full control over the operations, including decision-making. The owner also enjoys high profits.
- Joint Venture
This is the most complex business formation. You will have to partner with the local Chinese companies when registering your company in the country. Further, your Chinese partner will have a controlling shareholding. The government is discouraging this type of formation and encouraging limited liability companies. Joint ventures are a good choice when targeting restricted sectors. It is also good when the support of a local partner is important.
- Representative Office
A representative office (RO) is among the easiest form of business to start in China. The government takes it to be an extension of the company in your home country something that makes its registration easier. Unfortunately, it comes with many restrictions. For example, a representative office cannot enter into any profit-based deal on behalf of its parent country. Therefore, most people will use it for various activities like market surveys.
Choose an agency of experts to help with the registration and administration of your business
When registering your company in China, you will deal with many offices like the Public Safety Bureau (PSB), the Ministry of Commerce (MOFCOM), and the State Administration for Industry and Commerce (SAIC). That means the registration process is complicated. Do not panic. All you need to do is hire an agency of experts to help you complete the registration easily. An agency will help you in the following ways:
- Crafting compelling documents
- Helping you understand the various taxes in China
- Opening your company bank account in China
- Preparing audits
- Support for your annual financial statements
- Exploit double tax treaties
While China offers many opportunities for business growth, you have to choose the right business formation to succeed. An agency of experts will make the process of registering a company in China easy. They will also help you expand your business in the country.