SimpleBusiness.org

It is well documented in various sources (like in Setting up business in China by IE Singapore) the different type of entities a foreign business can set up in China. However what is seldom documented is how to get it done - a step by step guide.

We all wish there is such a guide, but it is highly unlikely there will be an authoritative one. The main reason being there isn’t a single prescribed "standard" way to do it. When I say this I do not mean there are criteria to evaluate each company. I do mean there are many ways to get things done.

Having stayed in China for a while, you will soon find out that this is the case for most things. There may be a
prescribed way, but that’s not how things get done most of the
time.

Also unwritten is the cost of setting up such a foreign-owned/invested entity. It sufficient to say that it cost quite a bit. So how do a cash-strapped, small-time foreign entrepreneur set up business in China?

First, with sufficient money, this really isn’t an major issue. Just throw enough good money at the problem and it will be solve. Consultants are at your service ranging from 8,000RMB to 80,000RMB excluding necessary payables and capital. They will provide you with consultation and an end-to-end (一æÂ?¡é¾™) solution.

This route is strongly recommended not only because it saves time and effort but it may be the only way to get it done without hassle.

Second, if you do not have the money, DIY is still not recommended. For two simple reason. One, you can forget about understanding all the relevent regulations. Two, you do not want to deal with the authority directly, trust me. So hunt for a less expensive consultant who may not have a posh downtown office or speak excellent english but gets the job done nevertheless.

Now here’s what most people don’t mention, or at least not directly. Setting up a foreign-invested business entity is really not for an shoestring entrepreneur wannabe. Typically, there are minimum investment requirements for foreign-invested/owned business. These investment requirements are not astronomical but enough to stop many an entrepreneur on the track.

The way to go for the cash strapped is what is commonly termed "local partner". The point to note is if you come from countries where you can start legal business partnership, the term "partner" does not implies any legal relationship between you and the local person. "Partner" just refers to a personal relationship.

This is a potential minefield that one has to thread carefully. Also I am not recommend breaking laws. Other than the consequences, any plan to startup in China will be jeopardised. My position is that we respect the law in the country when we are in that country. There do exist however leeways that can get us to where we want to be.