In order to source products directly from China,you need set up your own presence in China,What should you know before setting up a business in China?it is critical to be proactive and fully prepared before you take the strategic move to set up your own presence in China.
1.Choose the best forms for your business presence in China setting up a business in China.
wholly owned foreign enterprise, contractual joint venture, equity joint venture, a representative office or a local representation by a third party,these are all your choices.
2.Select the exact business scope before setting up a business in China.China National Development and Reform Commission may prohibit, restrict, permit or encourage your business set-up based on your business categorization and scope. Select the exact business scope which is suitable for you.
3.Looking for the right location for local preferential policies before setting up a business in China.
China abandoned its preferential tax rate for investments of foreign companies from January 1st 2008. However, some areas still offer local preferential policies for foreign investors in terms of land leasing/procurement, staff recruitment and management, local tax etc.
4.Meet the minimum registered captial before setting up a business in China.
The Chinese government requires certain minimum registered capital for various types of businesses. However, local Industry and Commerce Administrations may decide on your minimum registered capital based on their judgement of your business scope and operation scale.
5.Fully understand employers’responsibilities and liabilities in China.
China issued the new Law of Labour in 2007 which specified issues on employment contract, redundancy, etc. Without preliminary knowledge of this law, you may end up spending a huge amount of time and money terminating the contract with under performing employees, as the structure of the contract was wrong. You also need to be aware of the mandatory employee welfare and benefits so as to include such cost in the budget.
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