Doing Business in China
One of the world’s largest and fastest growing economies, the People’s Republic brims with history and opportunity. Economics may be a global language, but Western expats doing business in China often find integrating into Chinese culture to be a big adjustment. Many, in fact, invest in cross-cultural training to ease the process.
Starting a business in China is also not easy. A government that is uncomfortably imposing for many Westerners and a sometimes debilitating language barrier are too much for many to cope with. Many expats leave before their contacts expire and 60 percent of expats reportedly leave China after less than five years.
The situation is made more challenging by changes to the country’s visa system in 2013. Businesspeople who have to leave the country at regular intervals to renew their paperwork can no longer apply for visas from Hong Kong – a convenient and popular practice by expats before the laws changed.
It is also expensive to start a business, with companies being required to have 500,000 RMB in capital. Furthermore, rules stipulate that a Chinese citizen has to hold part ownership of the business. The result is that many foreign entrepreneurs are deterred, many fail, and those that remain have to contend with significant challenges.
This contributes to the country's overall ranking of 96th out of 189 countries in the World Bank’s Ease of Doing Business Survey for 2014. Tellingly, China ranked at 158th for starting a business, 98th for protecting investors and 120th for paying taxes.
Despite the downsides, the number of foreign workers in China has been increasing by roughly 10 percent every year since 2000 and expats continue to chase success in the Mainland.
In a country where personal relationships are essential for professional advancement, one of the best ways to get ahead is to have an understanding of the business culture in China.