One of the famous messages from the late Anthony Bourdain, a travel documentarian, was that although the media publicizes the protectionist reports about different countries, the truth is that many are very welcoming. The protectionist debate often scares off investors, making them stay caged to their markets, but they should look globally for faster growth. One of the best places for business expansion, more profits, and success is China, and it is easy to see why – a high-potential environment for growth. In this post, we will take a closer look at the process of forming a company in China, and highlight the most important things you must do.
Why China? What Should You Expect?
Before making the main step of forming a company in China, it is important to take a closer look and understand the basics. So, here are some facts about China and important benefits to expect for expanding there:
Domestic and foreign private enterprises accounted for about 60% of China’s GDP in 2020.
China has the second-largest global economy based on nominal GDP since 2014.
The country has a population of slightly more than 1.4 billion, according to 2021 estimates.
In 2021 the GDP of China is predicted to grow by 8.5%.
Industry contributes 40% of the GDP, services 51.6%, and agriculture 7.9%, according to the 2017 estimates.
What these numbers indicate is that China is a country overflowing with potential. Indeed, this is easy to see by looking at the country’s manufacturing sector, which is growing at a very rapid rate. Some of the benefits of company formation in China are anchored in the above facts, including the large market. You should also expect a large educated workforce, world-class infrastructure, and favorable taxes. For example, you will be able to enjoy lower taxes by forming a business in the encouraged sectors and within the free trade areas.
What You Need to Do When Going Offshore Into the Chinese Market
Expanding your business to China is like opening an enterprise in any other location and requires good preparations. So, here are the most important things that you need to do:
Selecting an appropriate business name: This is important to help avoid conflict of interest with other enterprises.
Enough capital for business: A lot of people going to open businesses in China fail because they did not prepare enough capital. The potential in China is indeed high, but you need funds to register a company, install the right machinery, employ staff and for logistics. Consider looking for funds that can support the business for about one year before it becomes self-sustaining.
Intensive market research: Although China is a huge market; we must indicate that it is not homogeneous. For example, the urban population’s needs are completely different from rural China. Therefore, your entry into China should be preceded by an intensive study of the market to identify the actual target.
Good strategy: Like other businesses back at home and China, your success depends on the strategy applied. So, how do you want to enter and grow the business? A good strategy might be providing special offers and partnering with targeted groups. Then, keep reviewing the strategy and adapting it to the emerging customer needs.
If you consider forming a company in China, in spite of the terrible Evergrande’s crash, this can be a good idea, but it needs to be executed correctly. First, you need to select the right type of company and then work with an agency of experts to have it registered. Indeed, the experts can hold your hands to make it easier to understand the local market, simplify the registration process, and craft good policies. With an expert on your side, you can never go wrong!