1. Do your homework.
Talk to people who have opened offices in China. Ask them how they succeeded and especially how they failed.
Make sure you’re informed about the state of the industry you’re in. A lot of this research can take place from your own home.
China wants high-tech.
China does not want pollution.
Chinese want businesses that will give a lot of people good jobs.
Chinese want to encourage development inland.
2. Pick a location
First, get to know the big cities. Shanghai, Beijing and Guangzhou are the major business, government, and industrial centers.
Once you’ve settled on a region, you have to find an office, since you’ll need proof of a lease to register your business.
You have to get an office rent agreement and you can use that as your office address, the agreement essentially promises you the space on the condition your business gets approved
3. Choose an entity status
A joint venture requires a partnership between a foreign business owner and a Chinese citizen.
Representative offices are an easy, low-cost way to go, but it drastically limits the scope of what you’re allowed to do in China.
The most common type of entity, therefore, is a wholly foreign owned enterprise, known as a WFOE.
4. Develop a business plan
A detailed five-year business plan is crucial, because once the government approves it, you will be able to operate only within its guidelines.
Make sure you include your location, projected revenues, product or service description, expected number of employees and budget requirements in the plan.
5. Find a liaison … or several
No matter how informed you are, you won’t get very far without consulting a representative to register your business.
A qualified liaison should be able to tell you where you need to go to register, whether it’s the local, provincial or national government, and should do the talking once you get there. You need somebody who has negotiated that territory a number of times before and you absolutely have to have people who speak Chinese to go meet with the local officials.
6. Find a bank
This part should be quick and easy, since there are plenty of banks with a huge presence in China.
If you’re dealing with a bank that doesn’t have any relationship with banks in other countries, it makes it tough to keep track of your money. You need to make sure you have a bank in your own country and a bank in China that has some sort of corresponding relationship, so your banking is more transparent.
7. Hire a staff
Hiring in China is a delicate process, especially when it comes to hiring managers. Don’t assume that just because a person’s English is impeccable they’ll be able to run the business properly.
If all things are equal, the language skills can be greatly beneficial, but it’s far more important to have a smart business person in that role who’s going to run the company the way you want it run.
Good talent doesn’t come cheap, according to the experts, so if you want the best, you have to be willing to pay them what they’re worth.
8. Take it slow
Now that you’re all set up, you have to manage expectations.
Don’t jump into quick business deals just to turn a profit. It takes time to build business relationships over there.
What will win you success in the Chinese market is patience. The Chinese have been doing business in a certain manner for thousands of years. Don’t even start to think for a millisecond that you’re going to change it.
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