Starting a Business in China

Table of Content

The current entrepreneurial boom is not only larger than that of the mid ass’s but also much more diverse. It has become easier for entrepreneurs to start new businesses without quitting their day Jobs. It is a natural reaction given to all the scary economic headlines, but slow downs don’t have to be barriers to begin a new business. Still with starting a new business always come risks. According to some reports, I have read in “U. S. Small business administration half of small businesses fail within their first 5 years. Among the challenges facing many businesses today re: tighter lending standards, higher prices of energy and food, and weak consumer spending. However, depending on your kind of business and location, you may find reduction in cost. Surplus may cut better deals, rent could be lower and workers may be more willing to work for less. When times are tough, people don’t hold for higher salaries. You could probably hire better people more cheaply starting out now that you could when things were booming.

This is why a lot of businesses are importing goods or even starting business in other countries. Throughout this paper, I will explain the process that needs to be taken to start a business in China. I will also discuss the cultural and language barriers that are often encountered. First, I will start by letting you know the registration requirements including; timeshare and cost association. Orientation to the registration requirements were found at Doing Business. Org website, which are the most important steps when starting a business.

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According to Doing Business. Org the following are the requirements: 1. Obtain a notice of pre-approval of the company name, 1 day, no charge 2. Open preliminary bank account; deposit fund in the account and obtain the certificate of deposit, 1 day, no charge. 3. Obtain capital verification report from an auditing firm, 2 days, ARM 350. 4. Obtain registration certification “business license of enterprise legal person” with SIC or local equivalent, 5 days 0. 08% of registered capital (registration fee) + ARM for public announcement. . Obtain the approval to make a company seal form the police department, 1 day, no charge. 6. Make a company seal 1 day ARM 300. 7. Obtain the organization code certificate issued by the Quality and Technology Supervision Bureau, 5 days, ARM 148. 8. Register with the local statistics bureau, 1 day RHOMB. 9. Register for both state and local tax with the tax bureau, 10 days, ARM 100. 10. Open a formal bank account of the company and transfer the registered capital to the account, 1 day, no charge. 11.

Apply for the authorization to print or purchase financial invoices/receipts, 10 days, no charge. 12. Purchase uniform invoices, 1 day, ARM 1. 05-1. 67 per book of invoices. 13. File for recruitment registration with local career service center, 1 day, no charge. 14. Register with Social Welfare Insurance Center, 1 day, no charge. Doing Business. Org) The Chinese economy is considered by many to be the ultimate investment opportunity. Not only does it offer a market of up to 1300 million possible consumers, it also brings about massive annual growth rates.

This is further strengthened by the fact that the Chinese government is doing everything in its power to continue to improve the investment climate for foreign companies by, among other things, continually spending large amounts of money on the improvement of the infrastructure. Here is a brief overview of the four main forms that a business establishment in China can take. I found this information in the “Go Wealthy website it also gives you some information on the Chinese economy and the do’s and don’t of business in China.

There is much information that one needs to learn about establishing a business in China. One must learn all the do’s and don’t of business in China. “The first possibility of how a foreign company can establish itself in China is through the establishment of a Representative Office (OR) in China. A Representative Office in China is not a separate legal entity but is considered to be part of its parent company. It is the most basic form of foreign investment and can be ere useful, and in some cases even necessary , for most administrative decisions concerning the establishment of a business” (Go Wealthy).

Before a foreign company is allowed to establish a OR in China the relevant authorities will have to approve the request and the registration of the office has to be completed. Once the documents have been submitted to the relevant approval authority, the approval authority will review the documents and decide whether it will approve the registration and establishment of a OR in China. Sino-Foreign Cooperative Joint Venture in China a Sino-Foreign Cooperative Joint Venture (C.V.), is a mint venture between a Chinese and a foreign company within the territory of China.

This Joint venture in China is based on a cooperative Joint venture contract in which terms of cooperation, the division of earnings, the ownership of property upon the termination of the contract term of the C.V., the sharing of risks and losses, etc. Are laid down. In China a Sino-Foreign Equity Joint Venture is still the most widely used type of foreign investment, although Wholly-Foreign Owned Enterprises are developing strongly. It is a limited liability company and it has the status of Chinese legal person.

In China this is a crucial difference to the OR, because unlike the latter, a Sino-Foreign Equity Joint Venture (EJB) is capable of buying land, hiring Chinese employees independently, constructing buildings, etc. A Wholly Foreign-owned Enterprise (WOOF), also known as Wholly Owned Foreign Enterprise, is a limited liability company established within the territory of China through foreign investment only. Woofs are becoming increasingly more popular, mainly because of the fact that there is no involvement of any Chinese investor thus giving the foreign company complete control over the newly established business.

Now to the fun part, Do’s and Don’t of Business in China. Do’s In China, business relationships are personal relationships; establish a trusting relationship that demonstrates your respect. Business cards are important. When exchanging business cards, it is polite to present your card Witt thumb and forefinger of both hands. Officials. Decision. Become friends with local influential Take time to discuss issues, ask for feedback and explain your The Chinese respect this approach over the preferred fast meetings in the United States.

Handshaking is the accepted greeting, with a light handshake encouraged, lasting as long as 10 seconds. Don’t Avoid unintentional criticism of others. Don’t poke fun at someone, even for laughs. Don’t be the first to reach for a restaurant bill. Don’t be late for an appointment. It is considered a serious insult. Don’t make snap decisions; the Chinese like to be included in the decision-making process. Now, let me tell you about the Language barriers and how to handle it explained by Bobby Jan from Gabbler Ventures. Doing business in China comes with both great opportunities and great challenges.

If you do not speak Chinese, overcoming the language barrier will be one of the biggest challenges you will face. For people accustomed only to Western languages, Chinese proves to be an exceptionally difficult language to learn. Even if you believe that you can learn a language quickly, you should be advised that the Chinese language is very different from English. The most obvious difference is that Chinese words are not constructed with alphabets and character construction follows a completely different set of rules. Chinese and English grammar is also very different.

For example, if you directly translate the expression “l will go shopping tomorrow” from Chinese to English, you will get something like this: “l tomorrow go shopping. If you want to learn Chinese, find a good Chinese tutor or enroll in a program. In the mean time, you must find a good interpreter. The problem is that it is very difficult to find really good interpreters in China since there aren’t many Chinese nationals who are fluent in English. China is a country with one office language, Chinese or “Han You”, but with thousands of local dialects.

If you randomly pick 100 people from 100 different parts of China and put them in a room, chances are that many of them will not understand each other’s local dialect. English is becoming increasingly common particularly in the large cities of he southeast, but unless you have been told otherwise you should assume that the Chinese you are dealing with can’t speak English and will generally conduct conversations and negotiations in Chinese. Regional dialects are also common. The Chinese Government is committed to standardizing communication in China around Mandarin – the official spoken language.

Most Chinese outside the Beijing region are bilingual and are able to speak Mandarin and their local language or dialect. Take the time to learn a little Mandarin before you go to China, it will ago long way towards impressing your hosts You can sat art Witt learning greetings and common courtesies such as please and thank you and introducing yourself. Even Just learning to pronounce Chinese correctly will be seen as an investment into the relationship. However, you need to be aware of the huge regional variations in spoken Chinese.

Other common Chinese languages include Www (spoken in Shanghai), Cantonese (spoken in the south-eastern part of China, especially in the Gudgeon province), and Hake (spoken in the southern provinces, including Gudgeon). For some useful phrases, a pronunciation guide and rules for communicating in Mandarin Chinese, see the Historically, China has been held together by a common written system so that people from all over China can communicate through writing. The official dialect of China is Mandarin, or Pop Tong Huh.

Therefore, when you are choosing an interpreter, you will probably want to pick somebody who is fluent in Mandarin and speaks workable English. However, if you are setting up your business in Guanos, Hong Kong, or some parts in southern China where Cantonese is widely spoken, you will probably need to hire an interpreter who is fluent in Cantonese too. Finding a good translator is essential when doing business in China. Given how often misunderstandings occur even between two people who speak the same language and share the same culture, an incompetent translator will cause needless misunderstandings and headaches.

A competent translator should be able to convey ideas and help avoid misunderstandings instead of merely translating words. One last tip on the language barrier is to be careful when telling Jokes. Jokes are often lost in translation and cultural differences. What is funny to one culture may turn out to be dull or, even worse, offensive in another. Also, don’t expect your translator to be able to successfully translate Jokes. If he could translate Jokes, you probably couldn’t afford him anyways. I want to take this opportunity to talk about my personal experience from my business trip to China.

I had few issues trying to communicate with Chinese people in my 2 and half week stay I learned 15 words in mandarin , but it was kind of hard to pronounce. I did good with the word thank you and I understood some of the things they trying to tell me which was usually the same thing that’s about it. In the building I was working at their were 15 different dialects which meaner, the person 2 desk next to you could not communicate with the person next to me. Luckily there were more people that spoke mandarin than anything else. This was a awesome experience the language was kind of difficult but I would do it again.

It’s important to immerse yourself in the understanding of Chinese culture including: traditional values, types of corruptions, how to build trust, how not to offend and lucky numbers. In the “china. Next. Gobo. NZ” website I found a lot more information concerning the understanding of Chinese traditional values, types of corruptions, how to build trust, how not to offend and lucky numbers. “Confucian values and concepts were designed to build a clean, honest and orderly society where responsibilities and obligations are observed. However, in practice they also have negative effects.

For example, Guiana can be used to bribe and corrupt public officials or people in more senior positions, or encourage practices such as insider trading”(china. Next. Gobo. NZ). The key business concepts derived from Confucian values are: adherence to a hierarchical system – including respecting government representatives and the elderly collectivism – group or family orientation rather than individualism the concept to “magazine” or tact throughout business interactions Ђ the concept of “inner” vs. “warren” or inner circle vs. outsiders the importance of Guiana or relationships in business (china. Zit. Gobo. NZ) When in China, the most important thing is to be prepared, flexible, patient and be yourself. Enjoy the opportunities of being a New Zealand doing business in China. What types of corruption are common? Examples of corruption you may come up against include: outright requests – usually through agents contracts are agreed, then an amount is added that you are expected to pay in cash requests for, and giving, expensive gifts Ђ misuse of funds or inside information ignoring labor and environmental rules. There are also well known problems concerning intellectual property (P) violations.

The frequency and seriousness of corruption varies according to the business sector, region and type of business. In general the situation is improving with the government engaged in a corruption crackdown. At an operational level you are most likely to run into nepotism or patronage, conflict of interest and excessive exchange of gifts and favors’. If you can arrange it, a senior person from your business should visit China. Doing so sends a positive message that you’re sincere and that you consider your relationship with them to be important.

These meetings also help your representatives in China to be more effective, because when their position and activities are supported by senior management they are taken more seriously by their Chinese counterparts. Evening banquets are necessary for hospitality, relationship building and entertainment. They are also a popular and essential process for business interaction. There are traditional taboos around numbers. Some business people are especially sensitive to numbers in China, especially in the outworn part of China. [pick]How to build trust In China, there is a strong sense of “inner” – inner circle and “warren” – outer circle.

There’s a very high level of trust, confidence and loyalty associated with anyone considered inner. People in this circle have common interests and common languages and can get things done quickly. Generally speaking, people from the same extended family, the same town, even the same province, or friends, colleagues and acquaintances are treated as inner – inner circle. When interacting with foreigners, inner and warren have another meaning. People of Chinese nationality re sometimes treated as inner while other foreigners are warren. However, overseas born Chinese are still expected to conform to the way things are done in China.

If not, they can sometimes also be treated as ‘foreigners’ or warren. This concept is also applied within China and within Chinese relationships. Someone from another city or another part of China can be treated as a “way did Rene” – an outsider by Chinese from another part of China. Employing Chinese-speaking staff, establishing your networks and making use of your Chinese business agents can help break the ice. How not to offend In China, “magazine” represents a person’s image, pride, reputation and social status. It’s an important part of relationship building. A person’s face is also their organization’s face.

The relationship you develop with an individual also represents your relationship with their organization. Chinese people can be extremely sensitive about gaining, maintaining, giving or taking away face in all aspects of life. Two of the easiest ways to cause a person to lose face are: to criticize them in public Disrespect their seniority or status. This can cause unnecessary barriers to relationship building. What you can do to give ace: If you are coordinating a meeting or hosting a dinner for a Chinese delegation, arrange seating according to seniority. Ђ Respect your counterpart’s seniority in front of their subordinates. Arrive on time or early for an appointment. Arriving late may be seen as a lack of respect. Provide better gifts for senior managers and/or officials rather than providing the same gift for everyone. If providing gifts to the whole team, it’s also a good idea to give a gift to the interpreter’s. Publicly thank your counterparts for their cooperation. For example, raise a toast to them at dinner. Ђ If playing a game – such as golf – Chinese often allow their opponent (someone in a much senior position) to win, even if they are the better player.

Focus on common interests and win-win issues. Though Chinese tend to point out conflicts and disputes in early stages of the negotiation, they prefer to leave them for discussion at a later stage. If there are critical issues that could undermine the whole deal, it’s a good idea to scope them out early. In some lifts, you’ll find there is no number for the 4th, 13th or 14th floors. Red and gold are for happy occasions. Black and white is used for funerals. This is all good information that will help you understand their culture not feel like you are disrespecting them in any way.

One will never think of numbers and or the importance of a color in a country when thinking business. Finally, but not lease the so important visa to travel. A business visa is recommended for travel to China. In most cases for a business visa you will need a letter of invitation from a Chinese company. If you are going to be a regular visitor to China, it will pay to have a look at getting an APES Business Travel Card which provides accredited business people with streamlined access to participating APES Mounties (including China). Go to www. Doll. Gobo. NZ to apply for the APES card.

Benefits include: express immigration clearance through special APES lanes on arrival and departure no requirement to apply for visas or entry permits multiple entry to participating countries for a stay of up to 90 days on each visit. You will find the information on this card and the application form is on the immigration website. The types of business visa are: a three-month single entry visa valid from date of issue double entry visa which is valid for two visits within three months of issue six month multiple entry sis which is valid for six months after issue.

Visas are required to transit China to territories such as Tibet. You should allow three weeks for business visas to be processed. The official 10 working days from receipt of application and invitation letter is getting very tight with the volume of applications.

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Starting a Business in China. (2017, Aug 15). Retrieved from

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