For many years, the growth of China’s GDP has reached records (7.8% in 2012), making the country a destination of choice for investors. However, there are characteristics that every entrepreneur must know before making an investment. Here are 11 points to keep in mind to bring your business to success in China:
Pay attention to the location of your business:
Laws differ in each Chinese province. Also, be sure to join or be accompanied by someone who knows the peculiarities of the local government and Chinese administration to guide and advise you. In addition, transports infrastructures and logistics vary considerably from one region to another. Industrial centers such as Shanghai and Shenzhen must be considered before any other.
Store carefully in your wallet cards:
Anyone who has been in China, even for a few days knows that business cards are often exchanged, holding both hands while bowing slightly. However, many forget to follow the protocol to the end. Rather than put it in your shirt pocket, keep the card on the table in front of you, if you’re having dinner. If you are standing, keep the card with both hands until you are out of sight to store it.
Do not fold your checks:
Bank employees systematically refuse checks when they were fold. Similarly, they will be reluctant to accept when the checks were signed in blue ink instead of black ink. So be sure to invest in a check holder, it will be more useful than you think.
Foreigners must pay unemployment benefits:
A law passed in 2011 provides that foreigners who receive wages in China now have to pay unemployment benefits in addition to income tax.
Make sure you choose an appropriate legal form:
There are 3 different social forms for foreign companies each with its pros and cons:
A joint venture requires a Chinese partner,
Representative offices are easy to create and require no minimum capital. However, Chinese law strictly regulates the structure, including its purpose. It is therefore impossible with this type of structure to sell products or services or even generate profits. The structure therefore only exists to represent and communicate for the parent company in China,
The WFOE (Wholly Foreign Owned Enterprise) structure is the most permissive social form, but a process leading to its creation is heavy and the minimum capital can be very high depending on the company’s sector of activity.
A fourth category should be included in this list, although it is not legally a social form itself: umbrella companies. They handle all the back office of your business and are able to recruit one of your employees under their name so you do not have to create a structure in China. They offer a turnkey solution allowing you to focus on your business.
Learn about visa procedures:
Legislation governing visas often varies, it is an argument for Chinese authorities on the international diplomatic scene, and procedural changes complicate the preliminary formalities to apply for. It is best to ask HR advisors such as INS Global Consulting, they will advise you and take care of the visa procedures and contracts in your company.
Post your trademarks and patents:
Disputes concerning intellectual property are commonplace in China. Your patents and trademarks protected in your country will not automatically be in China. So make sure you file a patent and its brands to Chinese authorities. In addition, and this is a fundamental point, Chinese law provides that the first to file a trademark is the owner of related rights. So if your company X has a certain reputation, and you decide to set up business in China, it is important to file the name in first place. Or you should pay compensation to the person who submitted the name of your company.
Hire your staff carefully: This includes managers, because they speak English does not mean that they have management skills or leadership. It is more prudent to refer to human resources advisors with a headhunter service.
Know how to behave at a dinner: Chinese people do not like to mix business and pleasure. Therefore, it is frowned upon to talk business at a dinner organized for the sole purpose of relaxing. Also, do not be on the reserve when the discussion revolves around money. Chinese people have no taboos about it.
Chinese people like to exchange gifts: Do not hesitate to offer a gift. Adjust the amount to your budget, even if the Chinese love luxury, it is above all a strong symbol. Red packaging will look the best, it is the favorite color of Chinese people. They consider this color a symbol of courage, loyalty, and fortune. Also, pay attention to the meaning in Chinese culture, a hat or a clock thus refer to death.
Finally, the Chinese are superstitious: Even if in many countries we consider 13 unlucky and 7 lucky, it is different in China. They consider unlucky 4 and 8 as bringers of good luck. Indeed, the 8 looks like the word “wealth” in Chinese, while the pronunciation of 4 is similar to “death”. Phone numbers and license plates having 8 on them are sold at tremendous prices. Do not hesitate to inquire and learn about this thousand of years old culture.
Sources:
http://www.tradecommissioner.gc.ca/eng/document.jsp?did=129204
http://ins-globalconsulting.com/blog/content/managed-services-china
Written by Yann Pellan