5 Things Foreigners Must Know Before Starting a Business in China

Every year, foreign-owned companies based in China collapse, fail, not because they are bad at business, but because they didn't understand certain things before registering their company in China. As someone living and running a company in China, there are certain things I also wish I knew before registering a company in China. In fact, there are several companies which have collapsed, not because they are bad at business, not because they didn't run their company well, but because they didn't understand certain things before registering their company. In fact, China is a very different environment altogether. Very different environment. You know, taxation, regulations, relationship, we call it guanxi. All these things can affect or collapse the business or the company you are running in China. Today, I'm in my warehouse, but I decided to make this video and share with you five main reasons or five things I wish I knew. And I'm sure if you are thinking of registering a company in China, these things will really help you before you register a company in China. If you are new here, don't forget to subscribe to this channel, like this video for more videos from China. we are a registered trading company based in China, I've been living and doing business in China for the past eight years and today I'm in the warehouse, this is our warehouse we do sourcing, procurement, shipment, logistics as well based in China so I've listed five main points and I don't want to forget these five main points that I wish I knew before registering a company in China, so the number one important point is your accountant can make or break your business, your accountant can make or break your business, in fact if you're a foreigner and you own a company in China, in the Chinese regulation you as a foreigner cannot file taxes It is only a Chinese who can help you file taxes in China. That is a regulation in China. Therefore, the accountant you get can really break or make your business successful. Why is this so? Because your accountant is supposed to save money for the company. When I talk about accountant, this accountant is not the person in your company running transactions, not that one. This is the accountant who is to ensure you pay taxes, not just paying taxes, paying taxes on time and also helping you save money, helping you in doing things that can help you save money. An example is paying you rent, utility bills and all these things. These are expenses that you don't have to pay tax on and as a good accountant, he or she have to help you in saving money, in using these kind of utility bills to offset the taxes you are supposed to pay. this is very very important so in finding an accountant most of them are chinese and some people the most important thing they consider is the cheapest accountant in fact cheap is expensive so before you get accountant the last thing you need to consider is not cost but somebody or a chinese accountant who understands english or who can speak english or is willing to always explain all the taxes you need to pay the right time to pay and understands what he or she is doing you know without a good accountant you might lose your work permit there have been several people who have left china because their accountant couldn't tax file tax at the right time not because they didn't want to pay you know these taxes are very cheap even if you start a company but because they couldn't pay they have to go back home or leave china because their work permit was cancelled and it's not because of the funding it's because their accountant didn't do the right job. So an accountant can play a major role in running a company in China. The next important thing is your registered address can cost you a lot. In registering company in China, so many startups think of getting a virtual office. In China, you can register a company without an office you can register a virtual office where there will not be any physical office you just have a virtual address to register your company honestly i've made a video about how to register a company and i think i'll make a full video about the advantages and disadvantages of having a virtual address or virtual office the safest of it all is to have a physical office and this physical office most people want to dodge paying rent every month but that will save you a lot as going to register a company with a virtual address or office yes this is very very important so don't simply choose the cheapest option cheap can be very expensive and if you have ever registered a company in china you have faced challenges like this because of office comment in the comment section let's share your experience and let's help somebody not learn these things in the hard way the next important thing i think you need to know is the city you register your company the city in which you register your company is very very important you know the city in which you will register your company will determine your access to logistics to certain products to customers okay so for example if you register a company in Guangzhou Guangzhou is known as one of the largest areas where foreigners usually visit and it's not just Guangzhou we have Yiwu as well and in Yiwu we have the kind of people who are usually if you go to Yiwu you mostly find Arabs people from Dubai and all those things you go to Guangzhou you mostly see Africans so the city in which you register your company can really make you or collapse your business based on your business scope. So in registering a company in China, you need to be very careful and sensitive about the city in which you want to register your company and that should align with your business, your business scope. That should align with your business scope now apart from these logistics and other things products the next important thing is visa issues visa issues so many people registered their company successfully but their work permit and visa were rejected not because they didn't have the right documents but because of the city in which they registered their company an example is Shenzhen Shenzhen has become one of the largest tech cities in China and now from my experience and from people who have been rejected it's like they are only accepting large investors people who are coming to register a company and employ about 20 50 100 people people who are registering company with large investment people they are looking at so if you're a startup and you don't have large investment and you go and register a company in Shenzhen your company will be registered but work permit and visa might be rejected and at the end of the day you run at a very big loss and it is work permit and visa that will enable you to live in China so the city in which you register a company is very very important in running your business imagine a founder not being in China not having access to your company that is the end of that company this is very very important apart from that the city in which you choose or area will determine your expenses the expenses that you have in your company because some cities are expensive even renting an office in Shenzhen can be five times more than another small city in China that is one factor you need to consider and it's very very important the next factor which i would like to talk about is what did i write registering a company in china it's like giving birth to a child it's like giving birth to a child so before people think about where should i which city what before you register a company in china you need to find customers you need to build your audience yeah customers is the most important aspect of every business people who buy your product people who need your service and that is the first most important thing you need to invest in before you even think about the city in which you should register your company because running a company in china is like giving birth to a child you have to feed the child you have to protect the child you have to care for the child you have to like everything as a baby until that baby grows and become independent if not you will not be mentally sound why am i saying this because china is a country that can surprise you there are rules and regulations change within a second within a short period of time therefore if you are running a company in China as as a startup, that means that you need good audience or some capital for the unexpected. For the unexpected. as a startup, you will need several expenses You will pay several expenses. whether you are making profit or not, you have to be paying taxes You have to be paying office rent. You have to be paying social security. you have to be paying other other expenses you need before even the business becomes profitable or stable and these are things you need to be mentally mentally this is very important this is one thing i wish i knew you need to be mentally ready psychologically ready before you even register a company in terms of this i thought oh if you just register a company people need products from china people need and within a second the business will be running my dear you might be disappointed these are some of the most important things i wish i knew before registering a company in china so you have so many factors but these are the most important factors i have listed if you have if you are thinking of registering a company in china or you are already in china running a business a trading company or whatever in china share your experience in the comment section as well i mean i know i didn't mention several several factors i wish i knew you can also comment that in the comment section and we will share that together there are several things i would like to share as well example is employing chinese if you are running a company in china the best advice is to employ chinese instead of foreigners the best advice from my experience is employing chinese instead of foreigners employing chinese might be cheaper but comes with full risk and responsibility that is why in my next video i'll be talking about employing chinese their advantages and disadvantages and they and also employing foreigners in china as a trading company so if you are new here don't forget to subscribe to this channel we are a registered trading company based in China and we do sourcing procurement factory tour translation service we do logistics as well so this is my warehouse and several packages here as well so anything business related in China you can contact us we don't just run business in China i have over eight years experience living and doing business in China i came to study the Chinese culture understand the environment before starting business because in China business is guanxi and guanxi in English means relationship thank you i don't want it to be long bye