Crucial Steps to Follow when Opening a Business
China is growing rather fast, and your business can grow at the same rate if you incorporate it there. According to McKinsey, China added the equivalent of the Australian economy to its GDP in 2019. This is why most companies that come to China easily sprint into multinationals, and this is evident in the growing direct foreign investment.
If you make up your mind to also join this high-potential economy, one of the primary requirements is opening a business in the country. Here are the main steps that you need to open a business in China.
Make the Big Decision to Expand to China
Before you can make any significant move, it is important to make an informed decision about business growth plans.
If you already have a running business back at home, the decision to go offshore might be dependent on how it is performing. For example, have you conquered the local market and want to expand offshore? Is the local market share shrinking fast, and you need to look for new areas?
The decision to expand offshore should open the door to more activities, including market research and identifying potential supply chains. More importantly, you need to start sourcing funds that will be used in the later processes, such as company incorporation in China and hiring employees.
Pick a Business Location
Prior to registering a company in China, it is crucial to decide about the preferred location. China is a large country, and you need to single out the preferred area based on the associated economic advantages. For example, you might want to open your business in a major city such as Beijing to serve the fast-growing population.
To take advantage of the government incentives, such as duty-free exports, relaxed foreign exchange control, and tax discounts, you might also want to consider locating the business in a free trade zone, such as Shenzhen Free Trade Zone. The good thing about China is that most of the areas are easily accessible through its well-developed road and rail network.
Create a Business Structure
When opening an offshore business, it is crucial to develop a good plan. This will allow you to think through your business closely and redefine the key components. For example, your plan should highlight the location, expected revenue, and budget requirements. Note that the business plan will be one of the main documents required during company registration in China.
Incorporate Your Company with the Help of an Agency
The process of registering a company in China can be complicated because you need to prepare a lot of documents and deal with different departments.
Furthermore, you might be required to make several trips to follow the process, making it even more expensive. This is why you should work with an agency of experts.
With a good agency, your business will be helped to not only register but also with crafting strategies for growth. The experts have been in the market and can tell you the best strategies to enter the Chinese market, how to outdo competitors and expand regionally.
Once the certificate of incorporation is released, you should use it to get other permits required for your business. Also, you should open a bank account.
Install the Required Infrastructure and Hire Staff
Once your company is registered in China, you should go ahead and install the right infrastructure for operations. For example, a manufacturing company would need to have the machinery purchased and installed. This should also trigger the need to place your first order for raw materials.
As you install the infrastructure, make sure to hire the required staff. Here, the agency of experts would also come in handy. Remember to have the employment agreement drafted well for all the employees coming to your facility.
Expanding your company to China can be a great idea, but you need to follow the right procedure. Consider contracting an agency early enough to help your business not just with registration, but other executive functions, such as bookkeeping, accounting, and filing tax returns.