Setting Up in China
While the Chinese market is becoming the world's largest manufacturing resource and potential market today, more and more companies want to seize the opportunity to establish their manufacturing facilities or representative offices there.
But where should a firm enter the Chinese market and at what level? Getting this right is crucial for success in China.
Hong Kong is the first port of call for most British businesses. Since the handover from British rule in 1997, the former colony has been the main gateway for foreign businesses entering the burgeoning southern Chinese market.
UK firms are rushing to set up in Hong Kong or the mainland; hundreds of other western companies are looking to tread the same path. In the past year, about 500 British businesses have set up in Hong Kong or on the mainland, according to Invest Hong Kong, a government-backed business service.
But Hong Kong was isolated from China for one hundred years. Even after the hand over in 1997, most Hong Kong business people find the same problem understanding the Chinese market much like British or international investor: Hong Kong is too different from China in both language and culture now.
There seems to be a developing preference why most western companies choose to set up their local presence in mainland China, where they find the biggest margin of profit and the greatest opportunities to establish business.
Advantages and Disadvantages of setting up in mainland China
Advantages
- Low running cost, low labour and raw material cost. It is estimated that the overall cost of setting up and running a manufacturing entity in China is around 1/3 of comparable operations in the UK .
- Local presence helps you to build up your brand quickly
- More opportunities to be found in mainland China compared to Hong Kong
Disadvantages
- Language barrier is difficult to break. Although every school in China teaches English, but you will find very few Chinese can communicate with you.
- Business culture is very different. A lot of deals are done by a 'dinner table' discussion. Bribes and corruption are still big problems in China at all levels of business.
- Quality Control is becoming easier over the years but still can be a big problem.
- Strong government control: your company will have to face all kinds of forms and reports to several of government offices every month.
Ways of getting around the disadvantages
- Seek help from a consultancy who is familiar with the Chinese market as JJ Alex Ltd.
- In most big cities, there are more and more people holding overseas qualifications and that speak very good English. Recruit these people for your business entity in China with our expert guidance.
- A reputable local accountancy agent can handle your monthly reports to all the government authorities at low cost. A local solicitor's firm at low cost can put your mind at ease.
- Having a PR person in your company to maintain good relationship with the government from the outset can benefit your company immensely.
What business entities to set up in China?
There are 3 main business vehicles for western companies choose to set up in China, namely:
Setting Up
Before setting up in China, we strongly suggest our clients review its current investments and their business plans, so an optimal investment vehicle can be determined to set up in accordance with the current China investment regulations and WTO market access commitments.
We provide our clients with in-depth Market Research Services, including research on Rivals, Feasibility Studies, and Marketing Management to help our clients to penetrate the Chinese market with a most appropriate and dynamic approach. Or, we can help you to find the ideal Chinese partner to set up a joint venture in your desired city in China; we also help you to credit check your prospective Chinese business partner.
We provide professional services to help you establish your business entities in various places in China. All our networking companies in all parts of China are authorized and credit-checked by the central government and have years of experiences helping western companies to set up in China. Help is always there on every step of your company's set up. Because of our connections with the local authorities, for most cases we are even able to help with your specific requirements, directly focusing on local issues.
Our net work in China support our clients with all necessary consultancies with language translation and back ups including Taxation, Government Regulations and Law, and specifies the local business culture.
Our services of pre-establishment
- Identify and review your objectives in China
- According to market research, advice you on the most appropriate business vehicle
- Recommend the best locations for your Chinese presence on the ground
- Arrange business trips to the proposed sites for your company in China
- Find potential local business partners and Credit check your potential Chinese business partners should you opt a joint venture system
- Advise on taxation, accounting and transfer pricing
- Legal services on agreements and contracts
- Translation services throughout your establishment in China
During setting up your new Chinese entity
Vital support on each step of setting up, whether it is a representative office, a branch, a solo company, or a joint venture, you will find our support invaluable.
After setting up your company
- Virtual office in big cities in China for representatives and entrepreneurs
- Local accountants help you with every month reports and forms handling
- Local solicitors who can review your inbound and outbound agreements' contracts and legal forms
- HR services
- On going PR and Marketing consulting services for foreign companies doing business in China , giving important local knowledge
Why JJ Alex?
Headquartered in the UK , we understand both the western and Chinese market, business culture, and most importantly, the people.
We speak both English and Chinese, so there is a reduction of the language barrier between our clients and their Chinese contacts.
We have a big network in China, with hundreds of local experts who totally understand the local policy and market.
We fully understand China. Most importantly, we have good connections with the local Chinese authorities, crucial in the current climate.
Our Fees
Fees vary according to the type, the location of your business set up and your requirements. Please feel free to Obtain a Quote with your desired location of your Chinese business entity and your requirements.
To understand how we quote, please see Fees and Quotes .
Please visit our Resource Centre for information on:
A Brief Introduction to the Development of China Development Zones
Lists of China National Economic and Technological Development Zones
Advantages and Characteristics of National Economic and Technological Development Zones
Policies on Foreign Investment
Provision on Guiding Foreign Investment Direction
Tax Policies Concerning Foreign Enterprises in China
Examination and Approval on the Foreign Establishment
Catalogue of Encouraged Foreign Investment Industries