DOING BUSINESS IN CHINA
Partnership with Chinese business people.
«The Bund». Shanghai.
«One of the most difficult market to stablishing a company, but a company needs to be in China, because is the number one markets in the world». Lorenzo Riccardi.
In the past was very difficult to enter in the Chinese market, because the tax was very complicated. Nowadays, enter in Chinese market is a reality, open to everybody.
China needs to rise up economically and decide to open the market making easier that the foreign people start to invest in this country. In order to reach this scope, it implemented many points to facility that foreign money entry in China.
– Establishing joint ventures. The most common way of entering the Chinese market for a foreign company is stablishing a Joint Venture JV with a Chinese partner. The foreign partner should be holding at least 25% of the equity. The foreign company has a limited liability ownership. On a JV the foreign company should share capital according to the volume of business and should do and have a resolution of the board of directors if the business environment changes.
– Wholly owned foreign enterprises (WFOE). (Companies with 100% foreign equity ) are the most common choice for new foreign investments. The BOD (board of directors) and equity contributions are very simmilar to JV with a very narrow business scope,(trading, manufacturing and service companies), and very different from Hong Kong’s scope.
This is only since 2004, before it was only possible to invest in WQG (wich was a place to manage agreements and sales) and now the trading and distribution are with FICE ( wholesale, retain ( fashion brands with boutiques in the country).
As a conclusion and personal impression I could remark that China is now a more open country with a very high level of overseas and foreign investments and businesses. We can still notice and warn a very high level of control and limitations from the government wich is what we have commonly heard as «Communism with Chinese characteristics».
Juan Carlos Beviá
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16 Mar 2015
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jbevia
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