Doing Business In China

China is the fastest growing economy in the world and the world’s third largest market, and a business investment into the China market can be very rewarding and profitable.

However, it is critical that potential business investors spend some time undertaking due diligence, building relation-ships, and, perhaps most importantly, taking the long-term approach and being patient.

It is a good idea to have an entry strategy into the China market that is easy and cost-effective, as well as an exit strategy.

Other considerations include:

• Undertake a detailed review of business plans and investment portfolios to ensure the correct business structure is put in place from the beginning. Generally, business structures will fall into one of the following categories:

  • Representative office

  • Equity joint venture

  • Co-operative joint venture

  • Wholly foreign-owned enterprise

  Each business structure will have different requirements and business investors must determine the structure that will best suit their needs from the start.

• Understand the exchange control issues, local business situation, and the complex and developing legal and political environment evolving within China.

• Research the business culture and ethical system that operates in China. It involves respect for superiors, duty to family, loyalty to friends, sincerity and courtesy. A relationship with an individual represents a relationship with their entire company.

• Strict observance of the labour management laws in China is extremely important. Rules apply to hiring, terminating employment, wage levels and welfare and benefits. Employers are strictly prohibited from under-taking certain activities relating to employment arrangements. The area of labour management requires careful review.

• The marketing strategy for a business investor is important but must be undertaken within the local advertising laws. There are some unique elements that must be observed. For example, the national flag cannot be used and terms such as "state-level", "highest grade", or "the best" cannot be incorporated into any advertisement.

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