Where would you want to see your company in the next five, ten or more years? Many of the entrepreneurs will tell you they would wish to turn their enterprises into revered multinationals. To achieve this, opening a China trading company is one of the best ideas.
A China trading company is an enterprise registered in China to take advantage of this high potential jurisdiction. Keep reading to learn more about China as an investment destination, the benefits of opening a company there, and the primary requirements.
Unique Benefits of Opening a Company in China
The large market is the most noticeable benefit of opening a China trading company. Let’s put it this way. If your company is facing major challenges back home, such as stiff competition, China has a huge market of more than 1.4 billion people. Apart from China, you will also be able to access its neighboring markets because most of them have signed bilateral trading pacts.
Here are other benefits to anticipate for opening a company in China:
- A pro-business governments
- An educated workforce.
- World-class infrastructure.
- Low tax regime, especially if you base your company in free trade zones.
- Easy access to the international market through bilateral trade agreements.
- Rapidly growing economy.
- Political and economic stability.
Opening a China Company: What are the Most Important Requirements?
Although it comes with so many benefits, opening a company in China can be pretty challenging. The requirements are particularly many, and you also have to deal with multiple offices. This is why you should consider working with a professional firm of experts.
Here are some of the requirements for opening a company in China.
The Preferred Company Structure
To enter and do business in China, you are required to identify an appropriate business vehicle or company structure. So, what type of company do you want to open in China?
The commonest type of company that you can open in China is a wholly foreign-owned enterprise (WFOE). Many foreigners prefer it because it allows them to have 100% shareholding. This means that you will enjoy autonomy in the decisions that you make.
Other types of companies you can form in China include joint ventures (JV) that require you to enter into partnerships with local Chinese partners. In this type of company, the Chinese partner is required to have a majority shareholding.
If you do not want to engage in profit-making transactions or simply want to market your brand, consider using a representative office (RO). This type of company is the simplest to form because it is considered an extension of the parent company back home. However, there are so many limitations, such as being prohibited from engaging in profit-making transactions or directly employing staff.
A Feasibility Study Report
When you decide to open a company in China, the Ministry of Finance and Commerce (MOFCOM) wants to be sure that the move is viable. This is why you are required to carry out a feasibility study and provide the report as part of the registration documents.
To create a good feasibility report, consider working with an agency of experts that clearly understands the Chinese market. The survey will also come in handy in selecting the preferred location for business operations. For example, the experts can help you to decide whether to base your company in Shanghai, Beijing or Chengdu, among other places.
A Good Market Entry Strategy
Like other types of businesses, you need to have a good market entry strategy to succeed in business. So, take your time to review the competition, targeted market, and products on offer with the aim of introducing something better. You should also adopt an aggressive marketing model to reach new clients and persuade them to buy from your brand.
The Right Employees
To implement your business policies and achieve the targeted status, you need qualified staff. The lovely thing about China is that there is an abundance of talented people to assist you. However, you need to carry out due diligence to avoid bringing on board staff with a tainted past. To carry out these background checks, consider using an agency with expertise and instruments for verifying staff information.
Opening a China trading company can give you the necessary leverage for fast growth, but you must get the whole process right. Make sure to work with an agency of professionals, such as Hawksford, that understands the market well and is committed to seeing your brand grow. You can also count on Hawksford for assistance with payroll management, accounting, and filing tax returns.
