Entrepreneurship in China

Organizing a business on the territory of the People's Republic of China is a very profitable enterprise. Over the past 30 years, the state has turned into a dynamically developing and high-tech empire.

General information

For many European and Russian entrepreneurs, China is an obscure country, the mentality of the Chinese is a mystery for the majority. Only those who have lived here for many years are well aware of all the intricacies of communication with local partners and the unspoken rules of doing business.

What is business immigration in general

Moving to China to do business makes sense if you need constant interaction with local partners. In cases where an entrepreneur is selling Chinese products in Russia, it is enough just to establish contact with a sales representative from this country - a permanent presence is not needed.

If an entrepreneur intends to open his own company in China, he will have to personally be present at the registration of the organization, hiring personnel and exercising control and management.

In this case, it is necessary to obtain resident status and (at least) regularly appear in the republic.

Business visa, types

There are two types of visas that are suitable for entrepreneurs planning a business in China:

1. Type M - for those who decided to open an enterprise;
2. Type Z - for those wishing to work in the republic for hire (individuals).

Registration must be done at the Chinese Embassy or in special firms. The validity period depends on various factors and can be up to three months. There are also multiple entry visas for 1-2 years with the possibility of extension.

The cost of the card is in the range 3 —170 $. On average, a document is drawn up in 5 days, excluding weekends. And for a small surcharge, you can get an urgent visa within a maximum of two days.

Profitable types of business

Most Russian entrepreneurs try to organize medium or small enterprises, in this case large investments are not required, the risk of bankruptcy is not too great.

Russian goods popular in China:

• Seafood;
• Corn;
• Vegetable oils;
• Confectionery and ice cream.

Most Russian businessmen prefer to periodically visit the territory of the PRC, and permanently reside in their homeland or in neighboring countries.

Immigration conditions to China for entrepreneurs

To obtain a permanent or temporary visa, a businessman must demonstrate his serious intentions in one of the following ways:

• By registering a legal entity in China;
• By purchasing real estate;
• By investing your capital in the country's economy.

The migration services may offer to apply for a multiple-entry visa.

Choosing a visa

Permanent immigration cards are most often issued after setting up a business; this can be done already in China itself by choosing a more convenient type of visa. Those who are determined to create a company apply for a permit “M”.

Conditions for obtaining a residence permit, permanent residence, citizenship

A residence permit can be obtained upon the establishment of an enterprise in China. Its validity period is a year, then there is an opportunity to extend it for another for 5 years.

A businessman can receive permanent residence only if he has invested large sums in the Chinese economy: from 500 to 2 million US dollars over the previous three years.

Who can get refused:

• Former civil servants, officers of the Armed Forces and other law enforcement agencies;
• Persons suspected of having links with terrorists;
• Convicted;
• Having dangerous and contagious infectious diseases.

If the conditions are met, then there should be no problems with obtaining a visa. And then 10 years residence (5 years with a residence permit and 5 - with a permanent residence) it will be possible to apply for citizenship.

Buying a ready-made business, starting a business from scratch

Our compatriots rarely buy a ready-made business in China. It is more profitable to open something new or invest in a working company to expand its activities.

Common types of entrepreneurship among Russians

Domestic businessmen are most often engaged in the sale of popular goods in China or the export and sale of consumer electronics in Russia.

It is no less profitable to organize small manufacturing companies here, to occupy niches in the service and entertainment sectors.

For example:

• Glasses production - due to the low cost, the payback is significant (more than 100%), but competition is high;
• Medicines - one of the most profitable types of business (more than 100%) in the world, and taking into account the large client audience of China - a very profitable business;
• The sphere of entertainment for gamers - Internet clubs and cafes, where local residents play Internet games, are in great demand in the republic. The net profit of such establishments is up to 50%, costs are minimal;
• Sales of cosmetics Is the fifth most popular type of business, with annual growth of about 15%. The value of the mark-up on cosmetic products reaches up to 90%;
• Creation of gadgets (smartphones, tablets) and their sale in Russia - a demanded business for many entrepreneurs. Domestic engineers are developing various devices, and production is being established at Chinese factories. Profitability - about 20%.

Business ideas with minimal investment

To make a profit from Chinese goods, it is not at all necessary to live in the republic: some methods allow you to do business in Russia.

Examples of businesses with small start-up capital:

• Creation of an online store. Making your own website and selling popular Chinese products is an elementary business. You will have to pay for the first batch of goods;
• Dropshipping. Intermediary services: you need to form a customer base, send it to the supplier and get the difference between the price announced to the buyer and the one set by the manufacturer;
• Organization of photo sessions, shooting during the holidays - this service became popular in China in the mid-90s, with a minimum cost you can earn up to $ 1500 per day.

Legal features

For businessmen who have no experience in doing business on the territory PRC, it is recommended to register the company through the appropriate legal offices. This can save both time and money, since Chinese legislation is difficult to quickly learn.

Business registration

There are several options for registering a business in China:

1. Open a company with the formation of a legal entity - it is recommended, if you need to hire a large staff (more than 5 people), rent a specialized large premises (for production, a shopping center);
2. Use an umbrella company - a firm that is a subsidiary of a foreign organization. This solution is suitable for aspiring entrepreneurs with no experience in the Chinese market.

The peculiarities of registering your business are the need to submit documents in the Mandarin language, for this you will have to attract experienced translators.

First, you need to collect documents:

• Registration application;
• Statement of the director of the future enterprise with his signature;
• Bank statement on the state of the account;
• Certificate of authority of the director (minutes must be signed by all founders);
• A copy of the head's passport;
• Five photos of the director 6.6 x 6.6 cm;
• An agreement on the lease of offices and other premises and a landlord's license for the right to lease premises.

Registration stages:

• Fill out a questionnaire, submit documents through a specialized law firm. Only entrepreneurs who already have experience in starting a business will be able to register a company on their own;
• After the adoption of the resolution (permission), you need to contact the Chamber of Commerce and Industry of China and register there;
• Open a bank account;
• Register with the Department of Currency Control;
• Submit information about the company to the tax and levy inspectorate;
• Get the code of the new organization;
• To issue the seal of the company;
• Obtain permits allowing the employment of local and foreign workers.

By the time the registration of a new enterprise takes up to 12 months... If you urgently need to register a company, you can do it for 8-10 thousand dollars.

Taxation

The peculiarities of taxation in China are the absence of a single rate. Its size depends on the type of activity of the company.

Examples of monthly contributions by industry:

• Construction, engineering services, telecommunications, sports organizations, cultural activities - 3%;
• Financial sector - about 8%;
• Various services, purchase / sale of real estate - 5%;
• Entertainment services - 5-20%.

There is also an annual corporate income tax, the amount of which depends on the place where the company is registered:

• Registration on the territory of the PRC - 30%;
• If in another country - 20%.

VAT is deducted only on the sale of certain groups of goods (or the provision of a number of services) and is equal to 17%.

Other nuances

The Chinese government pays great attention to the protection of its entrepreneurs, so it may be difficult to introduce those goods that are already produced in the country.

There is a list of ingredients that should not be used in the food industry, but it is not easy to find it. We'll have to make a request to the relevant state institutions.

Foreign businessmen often face even such difficulties as the approval of labels on the packaging: it is impossible to focus the attention of the consumer on the harmlessness of the product, it is believed that this infringes on the rights of competitors. This affected the now popular organic products, they have to be positioned as food for people involved in sports.

The Chinese population trusts foreign producers more than domestic ones. Therefore, it makes sense for Russian businessmen to concentrate on conquering the republic's domestic market by selling imports.

Tips for Entrepreneurs

You should open a business only if you have an understanding of the market and a minimum understanding of the mentality of local residents. This applies to both the target audience and Chinese partners.

The attitude of Chinese businessmen to doing business is very different from that in Europe. They are more focused on making quick profits and will never patronize their foreign partners too much.

To minimize the risk of getting poor quality goods from local producers, you should be very careful about drafting contracts. Litigation in China takes a very long time and is often decided in favor of “insiders”.

A successful business in China depends on an entrepreneur's ability to quickly adapt to local circumstances. It is necessary to communicate more with the Chinese partners, try to understand them, establish contact with them.