Starting a Business in China

Starting a business in China means overcoming an array of trivial bureaucratic obstacles, but it is not normally especially challenging. Beyond the formalities, establishing your firm’s image and reputation in the community are the key startup objectives.

Being open in an open market

Based on the percentage of imports and exports to total GDP, China has one of the world’s most open economies. While full implementation of all World Trade Organization (WTO) targets for market access has not reached “street level” everywhere, starting a business in China is much easier than it is in many other nations—although it still requires a certain level of determination and patience.

Being open and transparent in your business activities right from the start is important. It will take some time and effort to prove your corporate good citizenship. Each member of your management team and expatriate staff must act as an ambassador, always reflecting your firm’s values and intentions.

Taking care of formalities

There is a lot of paperwork involved in starting and registering a new business in China, but it is not terribly expensive or difficult, if taken one item at a time. If your firm is considered especially desirable, or if you have good local relations, a staff member of your industrial park or city might be persuaded to walk you through the process. “Business Entry Consultants” abound, but as a group they have very mixed reputations, so only engage one that is recommended by a trusted associate.

Making a splash

It’s vital to plan how your firm will first present itself to the community. An opening ceremony is almost mandatory, attended by your firm’s highest leaders, as well as political or business luminaries from your home country, if possible. With high-level attendance assured on the “home side,” the “Chinese side” may consent to bring its own political stars to your opening.

Openings attended by mayors, First Secretaries, provincial leaders, and (the best case) nationally prominent personalities have the best chance of doing well as they carry the implicit support of those leaders. Make sure that you invite the media and have a professional to take photos. In China, if you don’t have a photo to display, it never really happened.

Register a new firm with:

• The State Administration for Industry and Commerce

• The Quality and Technology Supervision Bureau

• The Social Welfare Insurance Center

• The Statistics Bureau

• The State Tax Bureau

• The Local Tax Bureau

• A bank (to document minimum capital requirements)

• The police (to register company seals)

• The local Career Service Center (to authorize recruiting employees)

• Trademark, Patent, and Copyright offices, as appropriate

Are we going in to win?

• Does my firm have the financial strength to do business in or with China for the long term?

• Do the company’s top managers have the time to attend fully to the many details of operating a business in or with China?

• Does China want and need the product and service package that my firm offers, or does the local market urgently need a Chinese product?

• How does the product need to be localized to suit Chinese tastes?

• Will my firm be able to offer comprehensive after-sales service to customers?

• How can my firm ensure that it builds a sustainable, competitive advantage in its China-related business?