With the opening of capitalism that the Chinese authorities have sought for nearly a decade now, it’s no wonder that the Great Dragon Chinese have experienced unprecedented economic boom that has truly off its trade balance and inevitably the rate of country’s growth to dizzying heights now that fuel appetite of the greatest actors of the international financial scene.

invest_china

In fact, eager to reap a share of the pie, many foreign investors, many of them French, were able to settle directly in China through the open door policy practiced by the government incentive in this country to attract investors foreigners. The opportunities are also dreaming of small business owners or sole proprietor ships in China hoping to find the new Dorado business! However, before you get excited about the prospects that China’s growth are dangled before the world, we must understand that investing in China is not an easy task on a more concrete level, and before you cast headlong into a project in this great country, you should clearly identify before a lot of practical questions.

What is needed above all to understand is that China, more than any other country, is a country with very strange and complicated customs without being aware at the outset, any foreign investor will risk whatever would bite your fingers. Indeed, beyond the numbers and statistics, the reality on the ground is an important factor that should not be overlooked under any circumstances if you want to do business in China.

Why invest in China?

In addition to the overall appeal for the incredible growth that China is experiencing, what are the concrete elementary arguments that may well encourage an investor to come in the land of pandas? To this question, an answer immediately obvious: labor! Indeed, with its one billion and 300 million people, this country has one of the greatest means of human resources than any other country in the world (except India) will never provide! Relatively cheap because of standard of living that is still quite low, this workforce also attempts to specialize more and more since the economic boom of the country. This avoids to bring a skilled labor elsewhere. However, the biggest obstacle to exploit this cheap labor is still the language barrier! Without knowing a tad of Mandarin, any investor will fail! But beyond the issue of labor, which is clearly crucial, it must be said also that the more attractive in China, the tax status of foreign companies. In fact, to attract foreign companies at home.

The Chinese government has provided many incentives and tax holidays which vary between 13% and 24% depending on various factors laid down by the laws of business law in China. For example, it was expected that as economic zones where they take root, companies were entitled to reduced charges of between 15 and 24% or that the companies offered to settle permanently in the region can benefit from tax exemptions for 2 to 5 years depending on the case! However, since 2007 the situation has changed somewhat since that year, the Chinese parliament passed a new law establishing a single tax system for both Chinese companies that foreign companies. However, preferential rates are still set by region of implantation.

How to invest in China?

Faced with these incentives arguments, it is tempting for large, medium, or individual companies to invest specifically on the Chinese mainland. However, to have no regret, it is particularly recommended for everyone to follow these few advice. First of all, it will be essential to undertake a market study in the standards to make you well aware of the reality on the ground and avoid unpleasant surprises. Such a study is further recommended that it is particularly dangerous to rely on official figures of the authorities! To do this, please contact the French authorities at the scene and associations of entrepreneurs who also officiate! Then, once the market study, it will identify and select the perfect place to settle. For example the areas most popular with French businessmen in China are “Yantai, Beijing, Shanghai, and Guizhou”.

Note that the essential criterion taken into account in determining the choice of investors lies in particular in the areas of taxation. Finally, you must choose between different legal structures to be able to install without problem in the country! Among other things, each investor will locate either as mere “representative office” or finally as a “Limited Company” in Hong Kong.