As tensions decrease is it time to invest in China?

5th March 2019

Now may be the time to get a foothold for your business.

The business tensions between the US and China look to be easing, so now may be the opportunity to start your Asia Pacific expansion and invest in China.

The second largest economy in the world has been struggling with a slowing economy and Beijing has now taken steps to relax controls over access to Chinese markets for overseas companies.

The thawing of restrictions seems to be part of China’s attempt to stem the slowing of the Chinese economy and comes on the back of $298bn of tax cuts to boost growth.

Why China now?

The moves come after two years of investigation by the US into China’s trade policies, and the tit for tat imposition of tariffs by both countries, adding billions of dollars onto US and Chines products.

But in December this the two countries agreed that there would be no new tariffs in 2019. There was also an agreement by China to buy a substantial amount of agricultural, energy and industrial goods from the US – great if your company is strong in these key areas.

Better protection for international companies

China and the US have also agreed to negotiate on intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, and services. All good if you’re planning to dip your toe into Chinese waters.

People.cn reported that China will further relax controls over market access, shorten the negative list for foreign companies to invest in China and permit wholly foreign funded enterprises to operate in more sectors.

At the National People’s Congress March 5 2019 Chinese Premier Li Keqiang further assured foreign companies that they will be treated as “equals” alongside Chinese companies

China – Facts

Population -1.4 Billion
Language – Mandarin
Currency – Yuan

Invest in China – Getting started

Establishing a presence in China can be daunting. It’s a big country and whilst English speakers are most common in the big cities you could get stuck in the smaller provinces if you don’t speak Mandarin. Choice of location will be important as well as doping your homework before you start employing feet on the ground. An understanding of the in-country employment laws, taxation and business regulations will be critical. If you are starting your expansion seek the right help as getting it wrong could cost you very dearly. For example, you need a reason to get rid of someone and that reason needs to be set down in your employee manual, otherwise your ex-employees can sue you for a lot of money.

Before you register with the government, you need to decide what type of business entity to register. The most common for foreign businesses are joint ventures, representative offices, and wholly foreign owned enterprises. Each, of course, has its pros and cons.

Invest in China? – now just might be the right time to start looking.

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