How to start a business in China

Starting a business in China can be one of the most exciting and rewarding experiences you may have. It can also be daunting and challenging. However, the best way to reach your destination is to know where you are going and how to get there, writes Kristina Koehler-Coluccia, Head of Business Advisory for Woodburn Accountants & Advisors

There are several approaches to starting a business in China with many important considerations. Navigating the complex pathways of the Chinese market takes more than just good intuition; it takes an effective roadmap.

Whether you are new to China and looking for opportunities, a start-up looking to expand your business or an experienced professional with a decade of experience in the country, everyone can benefit from fresh ideas and advice on how to improve their structures and business in China.

Your future success will depend on your motivation to learn and educate yourself, getting as much knowledge as possible to be able to help your company grow and make fast and smart decisions in an environment that is constantly changing and moving.

Any roadmap for launching in China should systematic and consist of three milestones: opportunity, implementation and growth.

The first step is to evaluate opportunity You must educate yourself about China through research, design a strategy and establish a budget.

The second step is implementing your strategy. This does not necessarily mean establishing a structure on the ground. It is simply about creating a structure to do business in China, whether that is directly from your head office or generating something new on the ground.

To achieve that implementation stage, you will need an ecosystem. You must evaluate your assets and protect them by developing system processes and operational guidelines.

Once you have a sufficient level of background knowledge and a network of trusted individuals, you can move on to the third milestone, which is growth. This last step is about knowing the numbers that matter for your organisation and analysing those numbers.

Looking at the financial management reports specific to your China business, understanding details such as customs duty and tax implications, and ultimately being able to evaluate these factors — as well as any unforeseen challenges — will allow you to make decisions such as will you retract from the market or move forward, will you move sideways, up, or down?

Ultimately, your goal should be to ensure that everything is done correctly. This will enable you to focus on what is critical for your business and to make decisive moves to maintain traction in the Chinese market. In this highly competitive environment, you do not want to be left behind.

In China, every industry and sector has its own specific data and regulations. Whether you are sourcing, producing or selling or even providing a service locally, research and knowledge is king. You cannot go into this market making uninformed assumptions.

Cultural or language barriers, as well as different time zones, cannot become an excuse for not staying on top of your organisation. You must learn to identify red flags and to have the ability to fix any problem in a timely fashion. In this way, you can avoid the most common mistakes.

One of the biggest problems companies face in China is the lack of communication with Chinese partners and their teams. It is important to know that rules have changed, and doing transactions under the table can signify the end of your business. If you are asked to operate in such a way, you should immediately walk away.

Having no data readily available can also be problematic in China. You must do your research on a regular basis to guide your organisation in the right direction.

Overnight success stories make for great headlines. However, not everyone knows about the intense work behind the scenes. Years of dreaming, building and positioning before a big public launch are the engine behind a business successful existence.

Your business journey will be unique to you and cannot be compared to any other experience. Once the initial excitement wears off and frustration accompanies your every step, that’s when your structured routine, your research and your perseverance will show you the way.

Don’t be the master of improvisation, but an informed and focused business professional. Some company owners make things up as they go along, or they get stuck in analysis paralysis and never start. Neither extreme is good. The best way to accomplish any business or personal goal is to determine every step it takes to achieve it.

Taking each step at a time will lead you in the right direction. Some may take longer than others, but every single one of them is an integral part of the process you are about to start.

Finally, you don’t have to do it alone. There are resources readily available and at your disposal. Do not hesitate to use them. They will be the best companions in the journey to success.