Starting A Business In China:5 Tips

Starting A Business In China:5 Tips

What crosses peoples mind most when they think of China is business. So how can you break into the world of Chinese business? The prospects of running a business differ depending on if you will be running a business based in China, or start an export enterprise (which much more common, and...

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What crosses peoples mind most when they think of China is business. So how can you break into the world of Chinese business?

The prospects of running a business differ depending on if you will be running a business based in China, or start an export enterprise (which much more common, and easier). Thus, I have separated the two below.

Running a China based business. If your goal is to run a business that is based in China then you need to familiarize yourself with the Chinese business environment and structure. And you need to ask yourself which kind of business do I want to operate?

1. Wholly Foreign Owned Enterprise (WFOE). WFOE is a limited liability company fully owned by foreign investors in China. It can be manufacturing, service, trading or whatever. It allows you to totally control your business.

2. Representative office. This is a separate legal entity that represents a foreign company in China. It facilitates quality control, product promotion, creating brand awareness, market research but cannot engage in direct profit-making abilities.

3. Joint Venture. This is collaboration between a Chinese company and a foreign company, it can be a separate entity established by companies, a contractual relationship, or a partnership.

4. Labor Dispatch. This method is done through a Professional Employment Organization (PEO) also known as an umbrella company (no, not Resident Evil). They act as your subsidiary in China and hire employees for you. This, by far, is the cheapest route but limits your control of the business.

The other option you have is getting into the export business. This is arguably the best option for most people reading this article, especially students and those holding down a full-time job. The great thing with running a small international business is that no amount is too small and if you are a beginner in business, its best to start small. If this second option is what you plan for then you need to pay attention to the following five keys.

* What goods to buy. If you ever plan to do business, the first thing is to define the type of goods you want to trade. There is an endless choice of goods to trade so you must define what you are sure will sell well in your country. And of course, the goal of business is to buy low and sell high.

* Where to find the goods. This is perhaps the greatest problem for most foreigners attempting to start a business here. One of the best places to find companies is aliexpress.com.  Find a company that produces what you wish to deal with, get their contact and factory address, and head over to see for yourself. There are plenty of other websites that you can use as well.

* What’s the market like for the goods? This is important because of negotiation. It will help you not to lose money and avoid unnecessary mistakes- like choosing the wrong product, shipping process, or brand.

* How to ship goods to your country. Depending on your country, there may be an endless choice of shipping companies. Some companies do bulk/group shipping, and some don’t. In group shipping, you can ship any quantity of goods no matter how small. Contrary to what most believe you do not have to have thousands of dollars before you can send some goods home. Another shipping option is full container shipment. This is what comes to many people mind when they hear of international business. This is for the big buyers.

5. Your country's importation policy. You need to know what goods are banned from your country. 

This guide is not meant as a full how to start a business in China, but rather as one of the first stepping stones for those who have an idea about being their own boss. Lots of our readers are entrepreneurs themselves, so I encourage those of you who are to share some other tips about getting a business started in China.


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