There are quite a few benefits of having a company in China.
Access to the China market
Many companies from abroad successfully sell in the Chinese market. However, they often have to go through a lot of complex processes and paperwork in order to do so. On the other hand, the most direct and legal way to appear in the local market is to have your own local company. When you work as a Chinese company, you can issue formal receipts (fapiao) that can be used for the local accounting. This is very important, as it will make your company trustworthy and legitimate. Keep in mind that, in general, businesses that cannot issue a legal receipt certainly seem unprofessional and shady. If you start your own business in China, you can also open a local bank account with the company and start online transactions. This is quite useful, since the Chinese eCommerce industry is on the rise. One method to get a piece of that cake is to incorporate a company in the country.
Lower manufacturing and supplier costs
This is one of the key reasons why many Western companies come to China. After all, every business has a high priority placed on profit margins. Making money is what keeps a company running. If you are doing business from within China, you have a chance to expand upon the products you are offering while still being able to keep your price points at the low levels you may need. It depends on the product, but the costs can be cut by up to 80% in China! This figure is something that can be a huge factor affecting your next business decision. Finding a manufacturer within your price range is also not so difficult in China. You can locate the manufacturing needed at a cost you can afford so you can stay in business both in China and at home.
Opportunity to hire local staff
The Chinese are very capable and crafty people that you can definitely work with. When you run a business in China, you have a chance to hire some of the amazing and diligent Chinese locals that will do everything to help you with your business. It doesn’t matter if you plan to have an import or export trading business or an eCommerce business in China, you will need workers. Hence, if you have a company in China, you can hire the locals to work for you. Issuing them an employment contract and giving them insurances and health benefits is similar and convenient. This practice is almost identical in every country in the world. Finally, many locals love working for foreigners and this means that you could attract top talent to help you reach your business goals.
Acquiring an investment visa
Did you know that China can offer you a visa if you decide to stick around for a longer period of time and work there? If you are the legal representative of the company/foreign investor, you have a chance to file for an investment visa. This grants your stay in China for up to one year without having to exit the country. You will be able to issue yourself an employee contract and give yourself a salary. The best bit is that you can be the go-to boss of your company in China.
The extensive manufacturing presence in China means that you can save a lot of time. To be precise, if you have a product to make, there is a good chance that a form of that product is already being produced somewhere in China. So, just send over your dimensions and the manufacturing process can be duplicated quite fast. This is a major benefit that is almost completely exclusive to the Chinese manufacturing industry.
How to gain market entry into China
Below are the soft assets that would be implemented to gain market entry in China
Create a corporate entity in China
Technically, it is possible to start your business in China as a foreigner with no assistance. However, know that there will be a good amount of hurdles waiting for you. Hiring a local consultant can really ease the process if you have what it takes when it comes to budget. A consultant can help you make decisions regarding your business structure, they can organize and file the paperwork, and act as the company representative while you are not in China. Also, know that there are multiple ways to set up your business in China. Each way has its own advantages and disadvantages.
Representative office (RO)
Joint venture (JV)
Wholly Owned Foreign Enterprise (WOFE)
Franchisee, Licensing, Agency, Royalty, Distributorship or JV agreements
Collaboration with other businesses is critical to allow businesses to survive and grow. In more competitive markets, the more burden there is to ensure that they come up with some new methods and approaches that are likely to assist them in the expansion of their businesses. There are many approaches that can be relied upon depending on the kind of business environment that it is operating in. The general term for that is called partnership agreements.
Protect your company brand elements
Register your brand elements in the local intellectual property offices, to prevent anyone in that country from claiming use of it. It provides trust to your team and customers that if they want to procure your product and services, they can only goto your company and no-one else.
Import and Export Licenses
Each country will regulate and tax international imports and exports. Many countries traditionally relied on an effective tariff system, together with careful regulation of imported goods, as a way to raise revenue for their treasury. If you want to run a business that requires getting goods from one country and sending goods to another country, it is important to know how to get a license for an import-export business.
Implementation of appropriate tax structures
Corporate tax planning is the development and implementation of strategies that result in lower tax liabilities by an organization. Given the complexity and variation of tax laws from one country to another, this is usually a lengthy and complicated process. Corporate tax experts are usually hired to develop and implement corporate tax plans.