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China company registration

Healy Consultants Group PLC
10 March, 2014

Doing business in China offers many benefits, not only because the country is a manufacturing paradise, but also because of its low business costs. Foreigners investing in China can benefit from the followings:

1.    China boasts countless port facilities, airports, inexpensive skilled labour, low raw material costs, and low rental. In addition to this, China boasts a massive service industry with countless shipping agents, banks, and financial companies to support new businesses;

2.    China is ranked well at 19 for the enforcing contracts in the 2013 world doing business survey. Therefore, foreign investors can be reassured that the contracts they sign are valid and taken seriously;

3.    China boasts 97 double taxation treaties minimizing withholding tax on funds transfers between countries. China has signed tax treaties with world leading markets such as Germany, the USA, Russia, and Singapore;

4.    China has an intelligent skilled labour force, boasting a literacy rate of above 93%, and the 12th highest average national IQ level in the world;

5.    There is an abundant supply of cheap raw materials in China. The country is rich in several natural resources such as coal, iron ore, natural gas, lead, zinc, and aluminium;

6.    There is an excess of rental space in Chinese cities, average monthly office rental in main cities is US$65 per square meter. Renting industrial space in Chinese industrial parks is cheap. The average industrial rent per month amounts to around US$2 per square meter;

However, there are major considerations that foreign investors should take into account before entering the Chinese market.

1.    Monthly government reporting is onerous including i) monthly financial statements must be submitted to the local authorities ii) sales tax iii) payroll iv) China’s government plays a big role in daily business. Therefore, china has many bureaucratic and legal barriers for new businesses;

2.    One of the biggest challenges in China company setup is government red tape, bureaucracy, and corruption. When there is ambiguity about the Chinese law, it gives rise to corruption and unnecessary delays in executing deals in the country. Consequently China is ranked poorly as the 80th least corrupt country on the 2012 global corruption index;

3.    Less than 1% of Chinese nationals speak English fluently. Consequently, it is difficult for foreign entrepreneurs wishing to incorporate and register a new firm in China to efficiently grow their business in the country as communication is limited;

4.    China company setup can take up to 4 months due to inefficient bureaucracy and complex licensing procedures, involving local and provincial authorities. To  highlight this, China ranks poorly as the world’s 91th easiest place to do business in the 2012 Doing Business Survey by the World Bank;

5.    Chinese copyright laws are poorly enforced. Foreign companies often have technologies stolen and counterfeited, potentially, costing firms millions;

To successfully manage your business in China, it is better to i) complete a feasibility study ii) prepare a detailed business plan iii) communicate with the China Chamber of Commerce iv) speak to your local China embassy. 

About the Author

Healy Consultants Group PLC

Since 2003, Healy Consultants assists international Clients with company incorporation services worldwide. Our services include: company registration, opening of corporate bank account, accounting and tax services, legal services, jurisdiction comparisons...more.

To inquire more information about global business set up; call us on +65 6735 0120 or email us at email@healyconsultants.com


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