looking to begin a new business initiative in China, the
following actions are intended to aid your market entry
Make an Initial Trip: Consider making an initial trip
to visit China and get a feel for the business environment.
Having a sense of the similarities and differences in the
way business is conducted can help you determine the best
way to approach your operations.
After this initial visit, you will have met people in your
industry and have a general understanding of how your line
of business is conducted. You may also learn potential key
players, partners or professional service providers you will
need to work with, especially in the initial stages of
Conduct Market Research:
Before diving too far into
the process of entering China, take some time to conduct
initial market research. This research should include
verifying the legality of your product or service in the
Chinese market, as well as the market demand for it.
It is also important to determine the current demand for the
product and to what degree this is being met by the current
competition. Understanding the strategy of your competitors
will help you focus on pursuing a unique approach to the
Decide on a Legal Structure: Have you determined how
you will be establish your business in China? Different
legal structures come with different start-up procedures,
tax policies, and limitations on the types of business
transactions that can be performed.
Options include establishing as a Wholly Owned Foreign
Enterprise (WOFE), Representative Office, signing a Joint
Venture (JV) with a Chinese firm, or engaging a consulting
or trading company are all options.
Determine the Regulatory Process: If only one piece
of advice can be given about the regulatory procedure in
China, it is to begin early. Knowing what certifications you
will need to obtain for your products is an important first
step in this process.
Once you have identified the regulations which apply to your
specific product, begin the regulatory procedures to obtain
the time consuming certifications needed; the earlier you
begin, the earlier you will be able to profit from your
efforts. To accomplish this task, it is a good idea to find
a reliable agent to work on your behalf.
Gather Information from the Market: In China, little
information regarding potential and upcoming projects is
publicized in media outlets or on the internet and it is
instead passed between people. Having a local presence and a
strong network of contacts in China is essential for gaining
access to this kind of information.
Prepare to Invest: As with starting any new business,
upfront costs should be expected. To run a successful
business in China, recognize that you will need to spend a
significant amount of time and money to establish your
However, although the initial investment can be significant,
the rapid expansion of the Chinese market means that great
rewards are possible for companies that make the necessary
financial and time commitment when entering the Chinese
Keep in mind, the rewards may take longer to see than you
would anticipate, so be prepared for a longer period of work
before the harvest.
"This article was originally published in Business Insider"