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China's rapid economic development over the past ten years coupled with its long-awaited accession to the WTO has made it an attractive place for foreign investment. Are you one of those who wish to enter this huge market and explore its potential?
When foreign investors make their first entry into China, it is important that they give careful consideration to the following major issues:
- Is my intended business operation allowable under the current Chinese regulations? Is my business encouraged or restricted or prohibited according to China's foreign investment catalogue? Does China's WTO market-opening timetable have any impact on my project in China?
- What kind of investment vehicle or structure should I use? Should it be a wholly foreign-owned enterprise or a joint venture or should I buy out an existing domestic enterprise? Or should I use a combination of structures?
- Where should I establish my operations? Are there any particular local policies and incentives?
- What are the costs for setting up?
- How can I structure my business in a tax efficient manner?
Searching for the right approach
It could be a daunting task to understand China's complex business and regulatory environment. Not only are rules and regulations subject to changes and interpretation, but there may also be local practices to consider. Going through the bureaucratic maze poses yet another challenge.
You may need professional advice in tackling the above issues, assessing possible risks and pitfalls and designing an optimal entry strategy that facilitates your business' long-term growth and market coverage in China. You may also need assistance in identifying the appropriate government authorities to approach and negotiating with China parties or officials before you embark on the entry. | 