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5 things to consider when setting up a business in China www.hongdaservice.com /blog/5-things-to-consider-when-setting-up-a-business-in-china Setting up a business in China Setting up, starting and successfully running a business in China is a rewarding experience that many foreigners from all over the world come here to try their hand at. Getting started on this side involves planning and deciding on most of the things a normal business in the West would need to such as: Type of China company Location factors Taxes Corporate banking Compliance with the law In this blog I intend to run entrepreneurs through 5 things to consider when setting up a business in China. Let's jump right in! 1) Type of China company Foreigners looking to set up shop on the Mainland (and Hong Kong) have a healthy amount of business vehicles to choose from such as a:

5 things to consider when setting up a business in China

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5 things to consider when setting up a business inChina

www.hongdaservice.com /blog/5-things-to-consider-when-setting-up-a-business-in-china

Setting up a business in China

Setting up, starting and successfully running a business in China is a rewarding experience that manyforeigners from all over the world come here to try their hand at.

Getting started on this side involves planning and deciding on most of the things a normal business inthe West would need to such as:

Type of China company

Location factors

Taxes

Corporate banking

Compliance with the law

In this blog I intend to run entrepreneurs through 5 things to consider when setting up a business inChina. Let's jump right in!

1) Type of China company

Foreigners looking to set up shop on the Mainland (and Hong Kong) have a healthy amount ofbusiness vehicles to choose from such as a:

WFOE (click here for everything you need to know about WFOE set up)

Hong Kong Company (click here for more on whether opening a HK company is necessary fordoing business on the Mainland)

Representative Office (click here for more on what a China rep office is)

Joint Venture (click here for the pros and cons of setting up a JV in China)

QianHai Company (click here for more info on setting up a company in Shenzhen's QianHaizone)

All of the different business vehicles mentioned above have their own unique set of advantages anddisadvantages, different legal liability, maintenance costs, registered capital requirements, compliancerequirements etc. so it is imperative that prospective business owners carefully weigh out their optionswhen setting up this side. This will ensure that the type of company chosen will provide one with themost suitable platform to achieve their business goals in China.

2) Location

China is a massive country with a few prominent place for doing business the likes of Beijing,Shanghai, Guangzhou and Shenzhen. Much like the different types of companies, each of these citiescome with their own pros and cons. Things such as the cost of labour, running costs of the business,proximity to container ports or a FTZ (free trade zone) and even the weather will influence one'sdecision on where to set up. It is necessary to do your homework regarding these various locationfactors and what kind of preferential treatment foreign companies can expect from the localgovernment.

Alternatively, business owners can look at setting up a business offshore such as in Hong Kong to useit as a stepping stone for doing business on the Mainland. Registering a business here is less complexthan doing so within the Mainland, and HK enjoys comparatively low tax rates.

Click here for more on the costs behind setting up a Hong Kong company!

3) Taxes

This is another one of those things that is intimately connected with the type of company that onechooses to register, as each business vehicle varies from the next. It is important to consider the taxrate as each cities or area differs. China has a plethora of cities or areas to choose from that enjoy bothlow individual tax and corporate tax rates. Some of these areas include:

QianHai - Shenzhen

Hong Kong

Hengqin - Zhuhai

Torch zone - Zhongshan

Free Trade Zone - Shanghai

4) Banking

Setting up a business in China requires one to set up a corporate bank account. This will involvedeciding whether or not to set up an account in a local bank or an international bank. 4 of the 5 biggestbanks in the world are Chinese! Some of the local banks in China include:

1. China Merchants Bank 招商银行

2. ICBC 中国工商银行

3. HSBC (Hong Kong and Shanghai Banking Corporation)

4. Agricultural Bank of China 中国农业银行

5. China Construction Bank 中国建设银行

List of all the Chinese banks here.

5) Compliance with the law

As with any other place on Earth, ensuring that one's business is compliant with the law should be atthe top of the list when doing business in China. It is a country that at times is infamous for its unclearcorporate legal laws and their changes, most of which are first published in Chinese.

Foreigners would benefit greatly from enlisting the help of local experts/lawyers when it comes tocompany registration, tax and accounting audits, employing local employees etc. to ensure they stayup-to-date with any significant changes, and above all else, that their enterprise is compliant with thelaw.

Not sure what type of China company is the right fit for you?

Click below to download our FREE China Company Comparison Table to see how 5 types of Chinacompanies stack up!

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