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When facing a health crisis such as the one affecting China right now, the most natural reaction is to panic and make rush decisions, which could hurt the future of your business in the region. The better informed you are, the better measures you will be able to take to protect your interests and those of your partners and employees. The return to normality for businesses in China is not expected during this month and probably through until late March, if not April/May. For this reason, it is best to prepare to remotely manage and administer your China business with minimal or no office staff in situ.

In the highly competitive and fast-changing Chinese tech market, innovation is king. In 2018, the Chinese ecommerce market exceeded $1.3 billion in sales. And the appetite of Chinese consumers, especially for luxury products, keeps growing. Creating a solid and effective ecommerce strategy can help a company reach the more than 300 million people making online purchases in China. A shifting regulatory and economic environment, in addition to intense competition, are forcing online companies in China to transform and adapt to changes faster than their Western counterparts. Chinese businesses are blending various forms of social media, entertainment, and commerce to reach even more consumers and grab a piece of the ecommerce market.

Foreign companies targeting the China market should develop an effective distribution model. Personal networks and relationships are an important component of a successful distribution strategy in China, especially at the local level, where these networks may consist of only a handful of decision makers.

Foreign companies looking to develop a successful marketing strategy in China must first understand the significant cultural differences that exist in the local market compared to other countries. To sell, distribute and market your product or services in China it is crucial to implement a well-thought marketing plan that takes into consideration the different rules and ways of doing business. One of the most common mistakes made by foreign companies is underestimating the cultural barriers. Many businesses fail to acknowledge that consumers in the Chinese market often have entirely different mindsets and motivations to those in the West.

Your brand is one of your company’s most valuable assets. Your company’s reputation and image stand behind the name that identifies who you are and what you do. But when entering China, your brand may be exposed to unexpected risks and dangers. It is in your company’s best interest to have a solid strategy and follow the correct steps to protect your brand in China.

Briefly, the current Cross Border eCommerce regime, initially launched in 2014, permits overseas sellers to sell consumer goods directly to Chinese consumers through certain registered e-commerce platforms (e.g., Tmall.hk, JD.com). The qualifying products can be imported into China on an expedited basis at reduced import tax rates, as compared to the goods imported through the ordinary import channel. The products are either shipped from overseas or stored in a bonded warehouse in China. Aside from the benefits that have already been made available and will continue to apply, the New Cross Border eCommerce Regulations issued Jan 1 2019 create certain new benefits to strengthen the incentives to purchase through the CBE channel. 

An increasingly popular option is to ship products in bulks from overseas to bonded warehouses in China. The basic requirement here is that the warehouse needs to be located in a Free Trade Zone. Being able to store and clear goods without the necessity of registering or filing with Chinese authorities is a clear advantage. Products can move freely in the free trade zones and be transported back overseas without the necessity to pay any taxes. Duties are only paid before customs clearance. The tax rates for the bonded model are comparably low to traditional imports as you can enjoy a 30% ‘discount’ of the traditional import rates.

The direct shipping mode is when with the personal parcel (e.g. when using CN Post, DHL) and the EMS model, you ship your products directly from overseas. A clear distinction and benefit with the direct shipping model is that packages don’t necessarily need to be checked or taxed. That will only happen in case the customs do a random check and spot the package.  A VAT will then be passed on to the end customer at the local post office, before the package can be collected. To read further on the direct shipping model, please read further. 
 

The current Cross Border eCommerce regime, initially launched in 2014, permits overseas sellers to sell consumer goods directly to Chinese consumers through certain registered e-commerce platforms (e.g., Tmall.hk, JD.com). The qualifying products can be imported into China on an expedited basis at reduced import tax rates, as compared to the goods imported through the ordinary import channel. The products are either shipped from overseas or stored in a bonded warehouse in China. Aside from the benefits that have already been made available and will continue to apply, the New Cross Border eCommerce Regulations issued Jan 1 2019 create certain new benefits to strengthen the incentives to purchase through the CBE channel. 

You are not ready to commit to the Chinese market, but you know there is interest for your product and/or services and you just want to get started in an easy, non-committal, minimum capital investment way. This article is going to provide you the legal in’s and out’s of marketing your product and/or services in or outside of China and the pros and cons associated with each.

Budgets can be seen as imposing constraints that are hard to live with and establishing goals that are hard to meet. A business that doesn’t know where its money is coming from or where it is going to isn’t in a position to expand, take advantage of investment opportunities or even make long-term commitments to suppliers and customers. It can lose existing business if the unforeseen happens – like the power being turned off or a shipment of goods being delayed. Not having financial records in order can mean denial of operating loans, the purchase of equipment or the ability to bid on government contracts.

A business plan is an important tool for managing and growing your business in China. A well-designed plan lays out a vision of growth and the steps needed to get there. A plan is also an essential communications tool for attracting financing for your business as well as managers and staff as your business grows in China. 

 

The benefits of choosing the franchise model as part of your long-term business plan in China can often be compelling. From raising capital without surrendering equity to supercharging your brand, it can give you the chance to grow your business quickly in the knowledge that your customers will receive reliably consistent levels of service and quality from your franchise outlets. But life isn’t exclusively rosy in the franchise world and here we look at a few of the pros and cons of the franchising model to see whether it might be right for your business here in China.

 

The dream of business growth is often seen as a desirable progression as part of a company owner’s long-term business plan. But some business owners prefer to keep their business in China small because they see far greater benefits in running very small ventures from so far away. But despite the apparent benefits of micro firms, keeping your business small can be a major barrier to growing your profits. So, is there any good reason not to grow your business in China if you can acknowledge and mitigate the disadvantages of growth? Here we identify and discuss a few of the key points

Managing growth is about more than just the present. Considering and seizing opportunity only as it arises may work for some, but it isn’t enough for the company who is seeking genuine, sustainable expansion for their business in China.  Growth can contain an insidious threat that is couched deceptively within current success. The picture is repeated every year across the global business world; revenue is increasing, clients are flooding in and as suddenly as success appears, it is followed by failure. Naivety (the lack of experience) goes hand in hand with ignorance (the lack of knowledge) in dooming many a company. Indecision and poor prioritization follow as common culprits, leaving the company with the proverbial rug pulled from under their feet. That isn’t good enough for a period where confidence in the global economy is rising. Business is good – recent figures from PwC suggest 91% of CEOs expect their revenue to increase in the next three years – but your ability to manage the expansion of your company is still an element of leadership that you simply can’t afford to ignore. So today we talk growth: why it matters, where companies in China can get it wrong and how you can learn to capitalize on it safely.

Companies entering the China market often dream of the sort of supercharged brand awareness that eclipses the competitors and becomes so ubiquitous that it enters everyday language. But brand awareness doesn’t have to reach the status of Hoover or Google to be successful. Local companies here in China that have gone from nothing to household names have done so by identifying their ideal customer, offering them sustained engagement and value without appearing to sell, and then harnessing that loyalty by exceeding customers’ expectations. So let’s look at three key principles which are not only cost-effective but crucial to the sort of engagement every company in China should be chasing.

 

It’s become a catch-all phrase for almost any business innovation that shakes up and challenges the dominance of incumbents in a given market, like China: disruptive innovation. But what if your business idea is not so revolutionary? What if it’s just a service or product that fills a gap in the Chinese market? Can it succeed without setting out to be disruptive? And what can you learn from those disruptive success stories that could be of benefit to your own business? The term was coined by Harvard Business School professor Clayton Christensen in his 1997 book The Innovator’s Dilemma and since then we have seen it applied to business success stories like Uber, Airbnb and Netflix. Let’s look more closely at two of these examples further down, but first we need to get one thing straight.

 

To ignore or not to ignore. If that’s the question, what is the answer? Let’s look at both sides of the argument and understand where the company in China should stand on what is both an important but often divisive issue. Is there a middle path through all this, and if so what does it look like in practical terms?

 

Pricing is everything for new companies in new markets. Nowhere is the issue of pricing more important than China, home of some of the most exciting and highest-stake new ventures on the planet. In 2014, China held only one spot and 28% of the combined valuation among the top 10 most valued startups in the world. The US, by contrast, held eight (65% of the value). But as of December 2017, China now holds four spots and accounts for 46% of the combined valuation for the 10 most valuable start-ups. It is estimated that if China continues to stay on the same growth plan then it will surpass the US by the end of 2018. Could you be among them one day – if you get your pricing strategy right. But why do we say this? Why is it so important?

The world of business is not a sterile one, made up of spreadsheets, data and documents. Pseudo-entrepreneurs may believe that, but it’s a fallacy. The cold, hard fact of the matter is that business is about one thing, and one thing alone. People. As a CEO / General Manager in China, how you engage with your client base can truly make or break your business. It is fair to say that there has

been a palpable culture of change in business owners’ perceptions. The reason is simple. More and more people are acknowledging the sheer power that customer service and high-level engagement can harness. And these strategies need to be at the very forefront of your business strategy.

I’d love to save the planet, but the health of my business comes first.’ If that is your response to the proposition of taking sustainability seriously, you’re not alone. However, lowering your company’s carbon footprint, reducing waste and encouraging sustainable good practice among your workforce and suppliers can reap significant economic benefits. Added to that, with governments pushing hard to hit sustainability targets, it means businesses can align themselves with some very good PR, not to mention financial rewards. With World Environment Day (WED) fast approaching on June 5th, sustainability and corporate social responsibility (CSR) are firmly on the agenda for many businesses in China. For their part, the Chinese government is investing in a green future and companies that fall in line with their initiatives will benefit from the increased spend. Let’s look at how you can make your business more environmentally friendly without threatening your bottom line.

Easy setup, minimal tax requirements guaranteed, 100% ownership, limited commitment. Proven draws for the Representative Office. Why, then, do so many entrepreneurs each year swap the safety of a Representative Office for speculation in mainland China – either in the Free Trade Zone or onshore? Simply put, it’s a logical progression of many a successful business. Right off the bat, setting up a liaison office is prudent. Foreign Invested Enterprises (FIEs) currently liaise from the three biggest China cities alone. Inbound entrepreneurs can hop on the fast-track to launch via pre-packed licenses, employee visas, and corporate bank accounts. The paradigm works well for those who want to test the climate. However, as veterans may attest, a time comes when expansion and growth call for a Limited Liability license and migration to the Free Trade Zones or onshore business.

Launching new businesses is a popular activity in China. According to a report by China’s Administration for Industry and Commerce (AIC) released on 14 January 2016, the number of companies in China is 77,469,000. Officially all companies in China must register with the AIC - from small noodle restaurants to monolithic state-owned enterprises. The figures that really caught our attention were those about the rising number of companies in China, which is growing at a rate of 11.8% per year. On average during 2015 there has been an astonishing 12,000 new companies being registered each day in China. This equates to over 4 million new companies per year! The AIC defines small businesses as those with a registered capital of less than RMB 20 million. Of the approximately 12,000 companies which are currently being registered daily this year, it was reported that 96.62% fit this criterion. A Limited Liability Company (LLC) structure in China looks the same as anywhere else: an independent legal entity owned by one or multiple shareholders. But there are plenty of good reasons why LLCs are so popular in this part of the world. The LLC structure allows companies and startups to trade directly with the local market in domestic China.

 

Training staff is great for business. It motivates employees, boosts retention and drives efficiency. But what if you’re a cash-strapped startup in China? Is it possible, or even advisable, to invest in staff training on a bootstrapped budget? The simple answer is yes! Especially here in China where staff retention is a big issue. You need a clear plan of attack to reap the rewards of low-cost learning and development programs. Here’s a step-by-step guide to creating a highly-trained, highly motivated workforce without spending a fortune.

Successful businesses require strong leadership, but the leadership skills that provide the spark for a small business to take off are not the same as the skills required to keep a large corporation powering forward and this is especially true in China. As businesses grow, their leaders must adapt and learn. So if you’re a small business leader in China with ambitions to scale, what are the leadership skills that you’re going to need and how can you acquire them?
 

No two businesses are the same but there are many common challenges. And high on that list is hiring.  Because no matter what industry you are in, finding the perfect candidate is never easy. Sifting through resumes can feel like a minefield at times, and that’s often only half the battle. As well as possessing the right degree of knowledge and expertise on paper, the perfect candidate must also be personable, able to see your company vision, and fit in with its culture and ethos. With so many factors at play, hiring new employees is never going to be an exact science – and that’s precisely why so many businesses admit to getting it wrong. On top of these universal challenges, there are those that come specifically from hiring in China – in the form of standard work contracts, understanding labor law, differing stipulations depending on employment contract type, and whether your business is a Representative Office or a Limited Liability Company.  Let us get into what exactly you need to know when making a hire in China

Lots of organizations in China seem to face huge capability gaps when it comes to successfully implementing global strategies. The strategy may be fine as a concept but Chinese individuals within companies very often lack a sufficiently global mindset to allow them to implement the strategy successfully – and that’s when things can go badly wrong. Many of the problems related to any corporate globalization process are caused by a lack of global cultural fluency which leads people to take the same approach to everything, every time, everywhere – they embrace a ‘once size fits all’ mentality. In the multi-faceted, complex global world we all work in today, this approach just doesn’t work – perhaps it worked twenty years ago when the big global players ruled the world, but the world has since become a much more level playing field these days and a ‘one size fits all’ approach is quickly rejected just about everywhere.

When setting up a business in China, it can feel like your to-do list is never-ending. There are so many tasks to complete – some complex, some more straightforward. Deep in that to-do list comes the task of setting up your corporate bank account. Unfortunately, this falls in the ‘more complex’ category. There are numerous reputable financial institutions operating in China, from local banks such as Bank of China, Industrial and Commercial Bank of China and Merchant’s Bank – to international names like Standard Chartered, HSBC and Hang Seng Bank. All offer the full range of services you would expect from an international financial institution, except there are certain governmental limitations on the International Banks. Even though setting up a corporate bank account in China is no more arduous than anywhere else in the world, it still requires the same careful consideration you would apply to any other business decision. And there are several boxes to tick to ensure you have everything in place before approaching your bank of choice. With that in mind, let’s look at everything you need to know to get your account up and running – from the documents required to the account opening process itself.

Do you want to expand into a new market, like China, with minimal initial office expense and hassle? Perhaps you are just doing market research in China, or your eCommerce site is attracting overseas customers and you’d like to learn more about the new potential opportunity before committing, or you are considering sending an employee or two abroad to open up the Chinese market. Setting up a physical office is expensive and time-consuming. Rather than finding office space, purchasing office equipment and furniture, hiring a receptionist, and setting up utilities, setting up a virtual office is cheaper, faster, and easier. Having a virtual office is a great first step to operating and legitimizing your company in China.

 

China has long been an attractive destination for entrepreneurs the world over. Offering a lower tax rate compared to most European startups, a strategic location at the heart of the world’s largest and fastest emerging markets, and a government committed to nurturing and supporting business, it’s not hard to see why. But while these may be the factors that get the headlines, there’s another major reason why so many flock to China’s shores to do business – the free trade zones. China’s free trade zones are essentially economic areas where goods and services can be traded, usually at preferential tax and customs rates. They were originally rolled out to boost international business in the region by offering benefits such as 100% foreign company ownership. Over the years, China’s free trade zones have evolved to offer ever-increasing advantages to the businesses within them. Many free trade zones cater to specific industries or business types. So why is free trade zone setup such an attractive option, and what could it mean for your business?

 

One thing we all learn as aspiring businesses is that there is a whole lot more to be a business owner than just coming up with the initial concept. This is true in China as well where image of a company and a business owner are important. Choosing the right office space or working environment for a startup is on the list of essentials. And a ‘one size fits all’ approach simply doesn’t work in China. Each new business is unique, so we need to consider the needs of the business and which working style will meet them at the best possible price. Not long ago, the business office was an asset in itself; something that a business owner would pay for and maintain themselves. However recent years have seen a real shift in the way we work and how office spaces are perceived. The rise of the managed office has been a slow and steady one but these days many businesses are reaping the benefits of this style of working environment.

When starting a new business, entrepreneurs are faced with several important decisions. One of the first that you’ll need to make when setting up in China is choosing which business activity you are going to trade under. Essentially, this is a question of the industry you are going to trade in and the types of activities you wish to undertake. While not the most taxing of tasks, it can be particularly daunting as there are only 63 industries which are listed on China’s Negative List – meaning these are industries that are either restricted or prohibited to foreigner’s investors. This means that all remaining sectors and industries are open to foreigner investors, which means thousands of activities are open. to choose from in China. Depending on the nature of your business, you may wish to choose a single activity or a range of activities under a single license. Your chosen activity will determine not only the type of business you are permitted to carry out but also, in some cases, the area in which you can set up. For example, some free zones – such as Shanghai’s Free Trade Zone – are advantageous for only a few business activities. As this is such an important, and potentially confusing part of the company formation process, it is advisable to work with a company formation agent or a lawyer who can advise on what activities best cover your business.

In the words of Shakespeare – what’s in a name? Well when it comes to setting up a business in China, the answer is quite a lot. Your company name reflects everything you stand for when you go to market, and if you think about it, it’s the very first thing potential customers get to know about you. In China, the company name registration process requires that names adhere to certain naming stipulations. This is not to say it is a complicated process, but it can take time to find a name that is available and suitable to your business needs.

Writing a business plan takes time, energy and a lot of research. So why go through all that effort? One reason is that it’s simply a good idea. Almost without exception, each business owner and company with a plan is pleased they have one, and each owner without a plan wishes they had one. A business plan helps you decide if your entrepreneurial idea has potential, helps you improve your business concept and is normally essential for accessing funding. And if you’re planning to start up a new business in Shanghai or China, having a business plan is more than just a ‘nice-to-have’. In certain scenarios, having a business plan is a requirement, without which you won’t be able to start your company at all. Let’s look at why you need a business plan in China and how to write the perfect plan for your new China investment.

There are typically many ways to do business in other countries. Some are easier than others, and though certain approaches could bring higher reward, they may also come with higher risk and higher cost. And since your international human resources strategy is a key component of your growth, how you expand internationally will have consequences. Before you decide how you’ll set up business in a new country, such as China, consider your options. Often the first thing that comes to mind for founders when expanding into new countries is to set up a business entity, open an office, and either hire people or send some team members to the new international site. It’s very “sexy” to open an office abroad, but the costs can be prohibitive. It’s certainly an option, but not the only option, and it may not be the best first step for your company.

 

The Chinese authorities aim to make it as easy as possible for foreign companies to start a business in the country. This is the guiding idea behind the wide range of options available in China’s free trade zones, representative offices and mainland businesses. If you are interested in the Chinese market but aren’t necessarily ready to take the plunge and launch a fully-fledged company there, opening a representative office might just be the way to go. Representative offices allow a foreign company to establish a presence in China while retaining complete ownership of the business from abroad. This makes them an appealing option for companies that want to ‘test the waters’. And there’s plenty of foreign firms who’ve gone down this route. So, what exactly is a China representative office, and what are the benefits of setting one up?

Setting up in a new country for the first time can be a daunting experience, even for entrepreneurs who already own and run businesses elsewhere. This is particularly true when setting up in China – with its well-known quirks and intricacies regarding foreign ownership. Setting up a representative office is a fantastic way to get a foot in the door of the Chinese market without getting bogged down in these complexities. Representative offices offer foreign business owners the opportunity to expand their enterprise overseas – promoting their products and services directly to the local Chinese market to boost their business back home. For entrepreneurs looking to move quickly to gain a presence in China – one of the world’s fastest-growing and most strategically placed economies – there’s nothing quite like it. What’s more, for many business people, opening a representative office acts as stepping stone to other types of business ownership – an opportunity to get to know local customs and business practices and assess the viability of launching a standalone company. Whatever your reasons for launching one, there’s never been a better time to do it.

Keeping properly maintained financial records is very essential for any business – large or small, and especially if you want to ensure long term growth. Whether you own a startup, or a successful SME, accounting and bookkeeping must be part of your business strategy and forward planning.To put it simply, bookkeeping involves keeping records of the financial affairs of a business including all financial transactions, however minor, that take place throughout the day. Records are maintained for VAT reporting and submissions and profits tax reporting and submissions, but are also integral to future business loans, business sale or business owner exit planning. It is no longer an option for businesses to maintain adequate financial reporting. Companies are then faced with two options. Hire an in-house and suitably qualified team to undertake the different accounting duties, including bookkeeping, auditing and tax accounting or they outsource.

Good financial management is vital to the success of any business. But nowhere is it more important than for startups in China - where margins are often tighter and the risk of failure much higher than in more established companies. No business wants to fall behind with their accounts. But with busy schedules and limited resources it’s not always possible to stay up-to-date. For businesses in this position, outsourcing can be an option. But before we get on to the merits of outsourced accounting, let’s take a look at exactly what a solid accounting process should entail.

For Small Medium Sized Enterprises (SMEs) the profit margins are under pressure in China. If you’re running a small or medium-sized company and seeing your profit margins erode all round, you are not alone. So where do we go from here? To start, let’s examine four areas that are contributing to the SME situation in China, and some solutions to help businesses develop better innovative reflexes, drive change and generate healthier profits. 

There are millions of smart business ideas -  millions of entrepreneurs setting up companies to deliver a brilliant product or service. China has more than its fair share of exciting startups, which means the culture here is ripe for business success. Yet we hear from many companies who have successfully set up their business but have become frustrated by their inability to gr