Access to clients in China: Why China is an attractive option for companies to invest
China is one of the best places in the world to locate a startup and/or
company due to its healthy economy, attractive finance options, impressive
infrastructure and government support. But the icing on the cake for many
entrepreneurs is the exciting mix of potential clients – right on your doorstep.
So let’s break down why China has such a strong pool of potential clients for
any entrepreneur looking to set up shop here.
1. Ready-made client bases:
What makes China particularly enticing for startups and companies is the opportunity to access ready-made client bases in a huge array of markets – from real estate, technology, retail and manufacturing, engineering, to oil and gas. This means well-prepared startups and companies in China can hit the ground running while knowing they can target potential clients in virtually any sector. Not only are these ‘client pools’ well-established here in China, they are rich in companies from overseas with global reach. This can be a huge benefit for entrepreneurs and companies looking to grow quickly and branch out internationally throughout the Asia Pacific region.
2. Multiple benefits:
There are also a multitude of opportunities on the domestic front. Setting up an enterprise in China provides access to:
Like-minded entrepreneurs – China attracts a large number of new business owners, especially in fast-growing markets such as digital technology;
A myriad of different nationalities and business types providing excellent opportunities for targeting clients in specific sectors;
A large number of high net worth individuals (HNWIs), providing a ready market for high end startups;
Industries that thrive in China’s transient economy;
Extensive support from governments and other agencies for SMEs and startups including free zones enabling 100% business ownership for foreign investors in sectors or industries that may otherwise be restrictive or prohibited.
3. Entrepreneurial culture:
The entrepreneurial nature of the economy here in China, and the ready-made client pool of SME business owners, some of whom are earmarked to be hugely influential on the world stage, shows the entrepreneurial culture of China.
4. Diverse markets:
Shanghai is one of the most important economic, financial, trade and shipping locales in China today. This is due to its incredible rapid development of industry over the last 30 years. Shanghai is responsible for the manufacturing of communication equipment, automobiles, electronics, steel products, petrochemicals and biomedicine. Nearby in Ningbo and Hangzhou, linked to Shanghai by the Hangzhou Bay Bridge and overland high-speed rail, heavy manufacturing of consumer and commercial goods take place daily.
Following Shanghai is Beijing – another leading city in China that is largely focused on manufacturing pharmaceuticals and electronics. It is one of the leaders in bio-engineering and information technology. Beijing holds its industrial power due to its neighboring sister city, Tianjin which itself is another manufacturing giant. The city is the leader in the aerospace and aviation, mobile phones, automobiles and alternative energy products.
Guangzhou in Southern China is one of China’s most prominent urban cities. There are thousands of factories located throughout each of the city’s manufacturing zones and those factories manufacture everything from toothpicks to automobile parts. Finally, there is Shenzhen (Guangzhou’s neighboring sister city in the South) which is known worldwide to be the electronics manufacturing hub of China and the world.
The “Go West” campaign is also an incentive focused program pushing foreign investors to setup and manufacture in the underdeveloped western regions of China – this includes Chongqing, Chengdu as well as Gansu, Guangxi, Guizhou, Inner Mongolia, Ningxia, Qinghai, Shaanxi, Sichuan, Tibet, Xinjiang and Yunnan provinces.
Offering a plethora of diverse markets creates a wealth of benefits to entrepreneurs, companies and startups looking to locate themselves within China.
5. High net worth individuals:
For entrepreneurs and companies aiming to target wealthy individuals, there are approximately 2 million Chinese high net worth individuals (HNWIs), each with wealth of over RMB10 million (USD $1.47 million). Considering there were only 180,000 Chinese HNWIs recorded back in 2006, this stark contrast means that China’s HNWIs grew 10x in the span of ten years – a dramatic increase and an astounding testament to how rapid China’s wealth generation has been in the last decade.
6. Transient advantage:
Entrepreneurs and companies looking within China can expect to benefit from what is known as ‘transient advantage’. In today’s world of globalization and digital disruption, Columbia Business School Professor Rita Gunther McGrath argues businesses ‘need to seize opportunities, exploit them, and then move on quickly when they’ve exhausted the opportunity’. This is where agile startups in China can gain an advantage over more established, less adaptable competitors focused on long-term strategy.
Next steps – set up a company, and reach those potential clients
So what’s next? Well, setting up a company can be remarkably straight forward and easy in China. Here are some options:
Explore free zones
This doesn’t just mean getting to grips with the basics of the application process, visas and so forth, it means understanding the unique startup landscape here in China and deciding on the right free zone for your needs. A free zone, also known as a free trade zone or free economic zone, is a designated geographical area where certain taxes, restrictions on business/trade, and employment do not apply as they do in the country. So for example, at Shanghai Free Trade Zone, the benefits include 100% foreign ownership, simple setup, and assistance with government-related services.
What you need to get your startup off the ground
The Chinese government states that setting up a business in a free zone is relatively easy and involves minimum paperwork, but it is important to remember you need to determine the type of legal entity, create a trade name, apply for a business license, get pre-approvals, register your business and obtain a license. There are other administrative elements also to consider when starting a business in China such as preparing legal documents, opening a corporate bank account, and starting the visa process. Seeking advice from a company formation specialist will ensure this whole process is simple and straightforward and your company gets the best possible start in China.
Opportunities ahead: Meet your client base
Entrepreneurs planning to start an enterprise in China can rest assured that an extensive client base will almost certainly be here – ready and waiting. The challenge is to make sure you set up your company in the best way possible to take advantage from the start. Taking expert guidance in setting up a business in China is vital to equipping you with the right tools needed when forming your company. Leading to exciting opportunities that lie ahead to enable you to build a successful venture.
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DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.