How to Start an American Business in China
If you are an American who has always dreamed of going overseas to China, starting a business overseas may be for you. The problem is that even though China may currently have a booming economy, it is still very difficult to start a business there due to their strict business laws. You will need to carefully plan and understand the foreign business process before you embark on this venture.
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Things You'll Need
- Business plan
- Location
- Proof of lease
- Capital
- Tax registration forms
- International representative
Instructions
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Establish a business plan. You will need a detailed business plan for the government to approve it. If you are selling a product or service that is not described in your business plan, the Chinese government can close your business. Your business plan should include your location, financial projections, product or service, number of employees and budget requirements.
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Select a location in China to open your American business. You should consider transportation needs, whether your business relies on goods that may be imported to China, how you will get the goods to your business location and what kind of government inspections and restrictions will you be subjected to. Some popular places to do business are cities with massive populations, such as Shanghai, Beijing and Guangzhou.
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Provide proof of a lease to register your business. You will have to get an office rent agreement. This can be used as your office address. The agreement essentially promises you the rented space for your business provided that it gets approved.
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Choose your entity status. Before registering with the government, you will need to decide what type of business entity to register. Common entity statuses are joint ventures, representative offices and wholly foreign-owned enterprises (WFOEs). The pro of a joint venture is you will be doing business with a Chinese citizen, but the con is they may end up with the business because you'll be working with someone who's familiar with the territory and on their turf. The pro of a representative office is they are easy and low cost, but you can't sell or do anything except build your brand name. The pro of a wholly foreign-owned enterprise is that it gives business owners maximum quality control, but the con is that it's much more complicated to set up, takes more time to get approved from the government and requires a minimum capital payment that you must invest in a Chinese bank.
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Register for state and local tax with the tax bureau. If you own a company, you are required to file a tax registration only once. Your company must file a tax registration form and the initial tax reporting forms and submit them for review. Contact your local State Taxation Bureau for more information on completing tax registration procedures.
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Consult a representative to register your business. There are many organizations in the United States that can help you with the application process. Contact the U.S.-China Business Council or Ministry of Commerce at the Chinese consulate. The U.S. Commercial Service office can also direct you to local offices in China. These resources should help you find a trustworthy international corporation to represent and register your business.
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References
- Photo Credit modern buildings bejing china image by jeancliclac from Fotolia.com
