Investing In China – everyone talking about it

Posted by Michael Michelini on Aug 12 2009

I’ve been more calls then ever before from friends and business associates back in USA. It must be all over the television more then ever – investing in china! But really, its not at all as easy as anyone can imagine…..

First of all, being a foreigner, who do you trust when you get here? The government isn’t exactly welcoming you with open arms, unless of course, you have millions of us dollars to invest. Then you think, well the domestic market is getting stronger, so why not sell here, there are billions of people, and if only a small percentage.

As I’ve written in other posts….it takes relationships, and time…..to get there.

I have been interviewing a lot these days, and one girl I interviewed today told me, “do you have a company in China?”. She is concerned, because she said many foreigners come to China, and to avoid taxes, they don’t register a company here! HOW CAN YOU DO BUSINESS IN CHINA WITHOUT HAVING A COMPANY IN CHINA? Sure, there are taxes, and filing requirements, but that is the first thing you need to be a legitimate place of business. It builds moral, and builds value. Plus you have a real company name in Chinese to put on your name card. Sounds simple….but yes, takes time and money to setup Its called initial investment, and no easy way around it.

Next is RESPECT for Chinese culture. I have read posts and articles…the China office needs to run independent from the Western office. I came to China to work here directly, and not to have a “central” office to report to. Time differences, and not being on the ground are perfect examples. And I believe a company will fail if they try to enter the Chinese market without having decision makers on the ground making it happen. It also builds credibility to the customers, suppliers, and employees that you can manage independently and quickly…not have to wait for approval from a western office. China wants to be China, not a remote office for a Western company.

Anywa, my two cents. Its almost annoying how many people talk to me about China business, and then don’t want to make the financial and cultural adjustments to fully realize the potential in China.

Echo Zhang

That gril is ture, a lot of foreigners do not register company in China but still do business here and hire people for assisatance.It is very common and they almost do trading.And of course i know how to run business without real company here…

Well, actually i think chinese gov is exactly welcome foreigners with open arms. They give you guys any kinds of preferential policies like tax… This couple of years,chinese investment environment began to deteriorate for some country and people’s interests,China is losing the status of world’s factory. But the situation is not bad,the gov just turn to focus on high technologh and some technical content industries. China’s enconomy’s is not good right now,but it is gradually improving and keep growing up.The people still have strong purchasing. That’s why we can see more and more foreigners come to China to start their business here. Do not forget you are gold diggers,you still can see opportunity,business and profit here. Investing in China is good choice and worth to do it. About the risk,i agree with Mike, China want to be China, everyone should respect our cluture and it is really big difference run business here.
http://www.michaelmichelini.com mike

Thanks Echo,
well, I think a foreigner should register the company in China if they want to do business here.
Sure, they can pay cash / TT from foreign bank, but its just not fair to the Chinese staff, don’t you think?

Yes, there are tons of local Chinese doing business without a license….is taht right either?

I think everyone should make a formal company for 2 reasons:

1) accountability – make sure people know who you are

2) build value – when you have a “side business”, its not really building a value that you can show to an investor….

I guess of course we’ve all been in startup mode, when we’re mixing our personal bank accounts and credit cards struggling to make ends meet, but at one point we have to become professional
Brian

“do you have a company in China?”.
Oh,see what question the girl asked!
Whether a foreigner should have a company in China or not is depended on what kind of business he handle.
Brian

Whether having a company in China is depended on what kind of business you do.
If you do business directly with China factories.There are three ways to help you transfer your money to the chinese factory.
If you do business directly with non-chinese,you make thinking about the details.
More information I would like to share with you when I am free.
Echo Zhang

Of course it is not fair Mike,that would be great if everyone think this like you… Guangdong is next hongkong that is why it is esay to handle business without lisence here but not easy in other place.Anyway i guess if you do not just focus on money you want to run your business and make it growing up, of course you will register legal company in China.

@Brian,maybe just depend on their situation…i think everyone want a legitimate business and avoid tax legally whatever kind of business.
http://www.michaelmichelini.com mike

Yes, I guess I care about the long term value-building of a business versus the quick profit in 1 year.

As yes, you make make quick money in one year, but you must also think about how to keep that cash flow coming year to year…and build a compounding (growth on growth) business.

that is one’s real goal.

About

American ecommerce guy, I've been living in South China - Shenzhen, Hong Kong, Dongguan (+ a touch of Philippines) since end of 2007.

Successfully selling online since 2004, took it fulltime early 2007. Love international business & connecting, and working on ways to give hard working people global opportunities. (Read More...)