How to do business in China
“EVERY PERSON I KNEW who went off to China thinking they’d strike it rich came home with a chopstick up his ass.”
My friend said this to me when I told him of my own plans to start a business in China. He was the most successful person I knew back home and had decades of experience working in the Far East. This wasn’t helping my cause, but it didn’t stop me from going to China and starting an English training center anyway. However, in retrospect, I can see how what he was saying was true. I too came home in the end with no more money than when I had started (though not less either).
Starting a business anywhere is going to necessitate some risk taking. I don’t believe that starting a successful business in China is any more difficult than in any part of the world, but starting one in China does have its own quirks, which can work against you or in your favor.
As a foreigner, you will be discriminated against in the business arena and this is just how it is. Typically, foreigners will need more money than their Chinese counterparts to start a business, and there are stricter requirements. Most enterprises started by a foreigner will need to have a Chinese partner. If the partner is good, you’re in luck. If the partner is not who you thought they were, it could be a nightmare.
There will be a lot of red tape to go through as well. When my friends and I started an English training center, we had to consult with many different bureaus in the city to make sure we were meeting all of the requirements so that we would have a legitimate business. Our school needed to have at least six classrooms, plenty of windows, enough chairs and desks, and more. It was only then that we would be granted a business license for the particular type of school we were running.
Types of Businesses
Everything you do will depend on the type of business you start. This is very important to realize, as some businesses will probably be easier to start than others. For example if you are starting a factory that produces motorbikes for the Chinese market, this will take a lot more time and resources than importing chips or diapers. If you are selling something to the Chinese market, there will be different requirements than if you are making something in China and selling it to a market outside of China.
I recommend speaking with other entrepreneurs who have started businesses in China and see what they have to say. Compare all the different types of businesses and possibilities to see what’s right for you. In addition, you should probably be living in China first before starting a business. Teaching English is good way to first come to China and get set up.
If you’re looking to do business in China, you can check out some of the websites and books below. As with many sites online it is difficult to discover how successful people are or aren’t, but I believe the below sites offer some good advice.
China Entrepreneur by Juan Antonio Fernandez and Laurie Underwood
This book talks about what makes a successful entrepreneur in China. In it, they cover everything from how to hire the correct types of people to setting up the correct business entity. It’s based on interviews with successful foreign entrepreneurs in China.
The Elevator Life (www.theelevatorlife.com/)
A video blog made by two Americans living in China, designing brands
and products sourced from China and selling their products to the world via online stores. They offer their advice on how to successfully navigate the Chinese business culture and interview other entrepreneurs in Asia. They also have an importing business importing wine into China. More and more Chinese consumers are buying wine.
China Business Cast (www.chinabusinesscast.com)
This website contains a series of podcasts of interviews with entrepreneurs in China. The advice they give paints a good picture of what one might be able to expect when launching a startup in China.
Startup Noodle (www.startupnoodle.com)
Startup Noodle is a blog offering advice to would-be entrepreneurs in
China from a foreign entrepreneur in China himself. You may contact the owner with questions about startups in China.
Tropical MBA (www.tropicalmba.com)
A blog and podcast about location-independent businesses, many of
which are in Asia. A location-independent business is a business that can be operated from a laptop or phone with an Internet connection from anywhere around the world. Such businesses often include online stores, software development, writing, translating services, and graphic design. The website has a series of podcast episodes and most of their interviews are with other entrepreneurs in Asia, including China. Not many of the guests seem to be selling in China, but many of them source products from there. Worth a listen.