What foreigners need to know to start a business in China
If you ever wanted to start a business where you are guaranteed a fruitful one, then maybe you could move to the land where there are an abundance of people. China has over a billion people, and your chances of your business prospering are greater than any other place.
Everyone wants that financial freedom and not being able to live from paycheck to paycheck. People want that financial freedom to help lift that stress acquired from the daily work grind of not getting paid enough. So, they start dreaming of starting a business. They dream of being successful, having people work under them for once, and being able to have more free time to do the things you want to do. So, you start planning on starting a business, somewhere where the population of the people is greater than other places in the world. You think of China where your dreams could come true!
If you could just grab at least one percent of the population, your business will be flourishing beyond your dreams. However, like any other business that is a start-up, it’s going to be hard. But with perseverance and the willingness to not give up, you can make your dreams of owning a successful business a successful one. Your lips will be grinning from one cheek to another.
Below are tips for helping you get your business started. Be sure to follow these tips to ensure that your business is successful. If not, your business will suffer, and your dream will be harder to grasp as you try to start all over.
Just like everything else, research is the key. It’s like when you get started on writing your research paper. The first thing you would want to do is find out what you want to write about and why. It’s the same way with business; you would want to find out what you want to sell and why, and how and who will buy your product.
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People are different, and they have different needs. Find out what the people like and what they can do with it. Will it improve their lives, or is it something that they want for fun. Whatever it is, make sure it will sell.
Acquiring a visa should be the first step before actually starting your business. You have to be able to complete the process before you even do anything with your business. TravelChinaGuide.com explains the process.
There are four requirements that are needed, but first of all, you have to know which visa you are looking for. China has two types of visas, m or f. F is for non-business exchanges or visits. This visa is usually used for people who are there for educational purposes, health or sporting events, and so on. Anything non-business related, this is the visa to get. But if you are there for business, M is the visa you want.
The four requirements for the M visa are as follows:
- Application form with a recent picture attached to it
- Valid passport and a copy of the information page
- Either one of the following documents:
- Invitation letter issued by a Chinese business or trade partner
- Invitation letter or some confirmation letter issued by authorized Chinese institutions or any other relevant units.
- An invitation letter from a Trade Fair
- Or a business license or certificate that proves the established enterprise shows the enterprise’s investor’s or owner’s name.
- For those that have multiple entries, an application form with a copy of previous Chinese entries that should be attached to the application form.
Submit all documents to the consular office at the Chinese Embassy or Consulate nearest you, with someone you trust, with an agency, or on your own. These are important documents, and our life and business depend on it. But most importantly, make sure that the documents are completed. If not, it will take longer to get those documents approved.
Also, if your Chinese is a very dusty, then find someone to help you fill out the documents in Chinese, preferably someone who is native Chinese. You’re in a country where your language isn’t dominant.
It normally takes four working days to process the application. But there are express and rush services that can help speed up the process. You can pay an extra $30 for same-day collection and an additional $20 for a second or third collection.
The visa fees do vary according to your nationality and how many entries to China you request. The fees are higher if you request many entries.
It sounds like a lot of work, but if you want to start your business, why not. You’re plan is already in motion, do it. It’s your dream, live it, and make it the most prosperous endeavor that you want it to be.
The location is another key factor. Where exactly do you want to start your business? How will it entice the people of that location? What can you offer that location that no one else can? Be sure to factor these before you start your business. Cultural differences strongly influence buyer behavior or even if the product or service is viewed as a need. Not everyone is going to be interested in what you have to sell.
Knowing your customer
You will need to explain who your core target customers are to potential investors and commercial partners. You need to persuade these investors why you think your business will do well in said town and to the target customers. You also must remember that it’s not about the demographics, but the culture and the social status that factors in on how successful you want to be. Learn what they are before proceeding in starting a business.
Ah, the business plan, the blueprint on how you will run and operate a business from year one to year five to year ten. Just like a house, you’re not going to start building a house from scratch without a plan. You will need to plan out the factors on what will work and what doesn’t. Running a business is the same way. You have to be able to map out what your business is about, and how you’re going to run it. Without a business plan, you’re setting yourself up for failure. Get a business plan!
Don’t make assumptions
Never make assumptions that your business will do quite well. Don’t think for a second that whatever worked in your hometown will work where you are. People do things differently than they would normally do in your neck of the woods. You are in China now, and things are done differently. The one thing that you should do is evolve the way your business works to adapt to the Chinese market and business environment.
Timing is key
Be sure that you are ahead of the game before starting your business. It usually takes months to a year to register your business, whether you’re dealing with government officials or not. Be ready to start planning at least one year in advance. Make sure you have all the necessary paperwork you need. Without them, it will take longer for you to get your business started.
Get a good agent
Finding an agent to help you get all the paperwork in order in China is a must. You must work closely with this person to get things done faster. This agent should be able to pass the Chinese bureaucratic system to help you get your business started faster.
According to PathtoChina.com, there are three key factors to consider when registering your business. They are the type of business presence, registration fees, and post incorporate services.
You will need to consider the kind of business presence you want in China. There are five options: Wholly Foreign Owned Enterprise (WFOE), Partnership Enterprise (PE), Representative Office, Joint Feature, and Hong Kong Company. You must decide which one of these will help represent the type of business you plan on starting.
There aren’t any minimum registration fees when registering your business, but it is advisable to put some down payment to help your business get started. It would help to put in at least RMB 100,000 to get you started.
It’s really important to learn how the Chinese legislation functions and what the requirements are for post incorporation services. Everyone charges differently, so learn which one your business falls under. It could help you make your business soar.
Learn about the barter economy
Learning how the bartering system works in China is a sure way to get ahead in the game. The Chinese love to do favors for each other. Favors as in, I help you, you help me kind of method. For example, if you know how to fix computers, and the other person doesn’t know a thing about fixing computers, but he’s an accountant, you both can trade off services. You did him a favor for fixing his computer, and in returned, he fixed your accountant needs. If you learn how to barter the way the Chinese people do, you will succeed. This will help create a client base that your business needs.
You must understand the way the business world works in China. Never underestimate its power, for it can’t get you far if you do. Building a relation, for the most part, involves family, hometown, university, or some rank social connection. You must be able to meet face-to-face with the people you are doing business with. You should be able to know what they like to eat, drink, the kind of clothes they like, hobbies, everything. This is a sure way to help your business succeed.
A trademark shows that you have ownership to a name and a product. But because you own the trademark where you’re from, that doesn’t mean that you own the trademark in China. You will have to go through the trademark process again. For example, you have goods waiting to leave China under your trademark name in America, but then, someone who owns that trademark in China hears that you are using that name can hold your business up. He/She can tell you to either pay up for using the name, or your goods will never leave China. Make sure that you trademark your name or goods in China, too.
Be sure to use a bank that is also in your native land. That way the relationship and working status of the banks are in cahoots. HSBC and Bank of America are great banks to use if you have access to them in your native land.
Finding the right staff
Finding the right staff is important for any business. Be careful on whom you choose, because if a person’s English is really good, it doesn’t mean they know a thing about business. Finding the right balance is the key. Someone who speaks English and someone who knows how the business works is your best bet.
To succeed, take your time. You’re still learning the culture of China and its people. You still need to learn their likes and dislikes, how to behave a certain way, and how they mingle with one another. You are in a whole new culture. Learn it, and you will thrive with your business success.
The opportunity is yours for the taking. Take it, and mold it into the winning formula you know that it can be. You must want it, feel it, eat it, breathe it, and sleep it. Make sure you know and learn from your surroundings because you never know if it will work. You have to try and make it work. Learn from your mistakes, and fix them. It’s the only way to learn.
There is so much to learn, but if you follow these steps, you are guaranteed to have a good business foundation. It never hurts to try to get things started. You dream it, then make it a reality. With hard work, it will certainly pay off in the end.