How to Make Business in China

How to make business in China

There are many important factors to consider when starting a business in China. For instance, you need a marketable idea and access to the local talent pool. You also need a good location with easy access to materials, transportation, and business partners. China is a dynamic and developing country. Although some areas of China may have less established business ecosystems than others, there are many developed cities that are attractive for investors. Many of them feature cosmopolitan cultures and ample industrial and office space.

YK Law

For those considering establishing a business in China, YK Law offers comprehensive services in the legal and business aspects of cross-border transactions. Their attorneys specialize in business development, risk management, mergers and acquisitions, government relations, and quality assurance. The firm also offers investment advisors who can help you bolster existing investments in China. Their comprehensive legal services and guidance will help you minimize risks and ensure a profitable future in China.

China offers numerous advantages for foreign companies, including cheap labor compared to the United States, advanced infrastructure, and attractive tax incentives. There are several ways to do business in China, and YK Law outlines eight steps to take.

Minimum registered capital

In order to operate a business in China, you must have a certain minimum amount of registered capital. Listed capital is an important tool for credit in China, and a lower amount will make doing business difficult. The government will monitor your accounts to make sure you’re meeting your minimum requirements.

The minimum registered capital to make business in China depends on the nature of your business. Whether it is a small or large business, it is important to comply with China’s laws and regulations. A registered capital of at least RMB 10 million is required for most types of businesses in China.

Scope of business

It is very important to have a clear idea of your business scope when doing business in China. This is because a license is required for certain types of business. It is important to check the scope of business of a company on the public registration record before engaging in any activities. The administration bureau of industrial and commercial, or AIC, in each area of China keeps the records of companies registered in the region, and makes them available online for the public to view.

China offers many benefits to foreign investors, but you need to be aware of the regulations surrounding foreign investment. You will need to follow the Foreign Investment Catalogue, which is updated every four years. This document spells out the areas that require special permission, as well as the circumstances surrounding these restrictions.

Human resource management

In order to be successful in China, a company must understand how to effectively manage human resources. There are many aspects to consider when managing Human resources. For example, how big your company is and what type of business you’re in can impact how you manage human resources in China. The following are some of the key things to keep in mind when deciding how to manage your Human resources in China.

First, understand the differences between the Chinese government’s policies and practices. The government’s role in China is different from that of the Western or Asian governments. Therefore, foreign companies must be flexible and understand the Chinese culture in order to succeed in the Chinese market.

Mobile accessibility

If you want to expand your business in China, you should make sure that your website and mobile applications are fully accessible to people with disabilities. In order to make your website and mobile applications accessible, you should follow the accessibility standards set by W3C. This organization develops resources for the implementation of web accessibility standards, including authoring tools, evaluation tools, and training materials.

Online reviews

To understand how Chinese consumers use online reviews to make purchasing decisions, researchers need to know how reviews are written and interpreted. The quality of the review has a significant impact on a consumer’s purchase decision. Therefore, vendors on OGB platforms should provide incentives and rewards to encourage high quality reviews. They also need to improve their own service, such as listing reviews by quality instead of date or making a fixed format for high quality reviews.

Although Amazon has banned incentivized reviews in 2016, they still exist in a variety of forms. The companies responsible for creating these fake accounts often use a scheme where they pay the reviewer a percentage of the purchase price to encourage them to leave positive reviews. Amazon has taken steps to stop the practice, however, by blocking new reviews if a seller experiences an influx of suspiciously positive reviews. The next malicious tactic used by Chinese sellers to boost their rankings is the sale of counterfeit products.

Best Business Cards to Travel to China

Best business cards to travel to China

When planning your business trip to China, it is essential to have the right credit and debit cards. You can use ATMs in China that accept Visa, Mastercard and Discover cards, and you can use Prepaid GSM SIM cards to use a local phone with a new number. Chinese business cards should be presented in Mandarin, with two hands. It is also important to present the cards in a business card holder. In China, your business cards are considered extensions of you and should be treated as such.

Credit cards and debit cards are the best business cards to travel to China

Besides a credit card, you should also consider using a debit card. A debit card will save you the hassle of carrying cash when you travel to China. It can also be used as a money belt to keep your funds out of sight. It’s also a good idea to combine a debit card and credit card to make purchases and withdraw cash at ATMs. However, you should keep in mind that not all establishments in China accept plastic.

ATMs in China accept Visa, Mastercard and Discover cards

If you’re traveling to China, you should have a little extra cash in your wallet. It’s recommended to exchange 20,000 CNY or about 5,000 USD before you arrive. Also, you should make sure you know how to write your personal information in Chinese before you visit a bank in the country. You can also use an ATM to withdraw cash, but you should remember to keep your receipts.

Credit cards are accepted at most places, but you should consult your home bank or credit card company before you use your card in China. Some banks will flag your transaction as “unusual” and block your card. Make sure you are aware of any fees that may apply before using your card in China.

If you plan on using a credit card, keep in mind that most ATMs in China accept Visa, Mastercard, and Discover cards. If you don’t plan on using a credit card in China, you can always use your debit card to make withdrawals. Many big cities will have 24-hour ATMs, but they won’t be available in rural areas. Most ATMs will have English interfaces, but not all cards are supported.

If you’re traveling with a credit card, make sure to know the language of the machines. Chinese ATMs will require your PIN number before they will give you cash. You can also research the language of the machine to make sure it’s not in English.

Prepaid GSM SIM card allows you to use a local phone with a new number

While you’re in China, don’t let a lack of connectivity keep you from staying in touch. You can use a prepaid GSM SIM card to make and receive calls using a local phone. These cards also come with local phone numbers. If you don’t want to switch your current phone number, you can port it to a local number before you go.

If you’re going to use a GSM phone in China, make sure it’s unlocked before you leave the country. Most US and Canadian phones are locked to a specific network. You should contact your local GSM provider at least seven days before your trip. In addition, make sure your phone’s GSM frequency is 900 and 1800 Mhz or quad band. Also, make sure your number is still working after you get to China.

You can buy a local SIM card from a local store or online. However, you should avoid roaming outside your primary coverage area. Roaming charges can run as high as $20 per megabyte for data usage. To avoid paying excessive roaming charges, make sure you have the proper carrier settings on your phone before traveling. A customer service representative can help you enter these settings when installing your SIM card.

Unlike prepaid land line phone cards, prepaid GSM SIM cards allow you to use a local phone with cellular data while in China. Besides saving on cellular voice and data connections, these cards allow you to use a local phone number and make local calls for local rates. In addition, you can use your local SIM card as a hotspot while traveling.

China Real Estate Crisis Explained

china real estate crisis

China’s real estate crisis can be explained in several ways. First of all, cash-flow problems plagued many developers. As a result, banks in the country lowered interest rates to make mortgage payments more affordable. Second, the government has not abandoned developers. Third, the Evergrande case was only a symptom of a larger problem.

Chinese developers are facing cash-flow problems

Several Chinese developers are facing cash-flow problems due to rising debt levels and falling property prices. The latest developer to experience trouble is Evergrande. The Chinese developer is having difficulty covering short-term debts, despite selling equity shares. As a result, local governments have bought $4.6 billion of its equity, but it may not be enough to resolve the deeper issues underlying the developer’s ballooning debt.

The problem has spread to dozens of cities, with wildcat boycotts affecting more than 300 housing projects. Some homebuyers have even halted mortgage payments to protest construction delays. Banks already have a difficult time meeting repayments due to developer defaults, and unfinished collateral could make their loans even more difficult to service. A full-blown crisis could leave millions of homebuyers stranded.

The problem is so severe that the People’s Bank of China has cut interest rates for Chinese developers. The bank hopes the lower rates will ease the burden on homebuyers and help developers obtain loans. However, the problem is not limited to funding and developers need to find ways to raise cash so that they can continue building.

Chinese banks have lowered interest rates to make mortgage payments more affordable

China’s central bank has compiled data from banks and lowered the key interest rate by 10 basis points in a bid to boost the economy. In the meantime, the government is also working to rein in the soaring price of real estate. With property prices continuing to rise, the government is under pressure to curb prices and maintain social stability. This has caused many banks to tighten their lending standards. The PBOC also announced that it would cut the amount of reserves that lenders must set aside. Whether these measures will curb prices in the near future remains to be seen.

The move is aimed at helping some home buyers afford mortgage payments. However, it will not stabilize the housing market, and will only drive the mortgage rates lower. This move could actually make property prices worse as households are hesitant to buy property for fear the projects will not be completed on time and prices will fall in the future. Furthermore, it could cost up to 6% of China’s GDP to shore up the balance sheets of property developers.

Chinese government isn’t abandoning developers

Although many developers are facing financial crisis, the Chinese government has proven to be more willing to bail out these companies than in the past. The three-red-line policy restricts developers from taking additional loans, which has cut into their cash. These new regulations also have made access to foreign markets much more difficult for developers.

The Chinese government is trying to contain the current crisis while at the same time keeping the property market on track. The government initially wanted to reduce debt in the property sector, but the current crisis has forced it to step in. Developers have also been facing difficulties in buying land. A slowdown in the construction sector is likely to worsen the problem.

The property boom in China has been a major driver of the country’s economy, accounting for nearly one-quarter of the country’s GDP. However, the Chinese government is now trying to rein in the real estate industry due to its stringent “zero-covid” policy. This has forced developers to sell off parts of their empire. At the same time, China’s real estate market is cooling off, with less demand for new apartments.

Evergrande case is a symptom of a bigger problem

The Evergrande case in China has put global investors on edge. The second largest property developer in China is deeply indebted. Its failure to meet its debt obligations could spark a credit crunch and threaten to undermine the confidence of investors in Chinese investments. The company’s failure could also affect the Chinese economy in general, affecting markets across the globe.

The company’s problems are closely linked to a structural problem that is affecting the real estate industry in China. The real estate sector is undergoing a slowdown and overinvestment. This could cause Evergrande to incur higher liabilities during its restructuring process.

While the Chinese government is concerned, the case is unlikely to spark a systemic financial crisis. Evergrande is not a bank, and it is unlikely that it will be rescued by the Chinese government. But the Chinese government is trying to help. It has told its major lenders to extend the interest payments on Evergrande’s loans. However, some analysts believe a direct government bailout is unlikely.

War between China and the USA for the electronic chip market

War between China and the USA for the electronic chip market

The tariff war raging between the United States and China was the main focus of the meeting between Xi Jinping and Donal Trump at the G20 in Buenos Aires.

This trade war affects traditional economic markets such as automobiles and steel. It also concerns a much more sensitive and vital sector for the future: technology (computer networks, artificial intelligence) and semiconductors.

Supremacy and dependence

Silicon Valley takes its name from Silicon, one of the most important chemical elements that make up electronic chips. The Pentagon strongly supported the California region because one of the first applications of electronic chips emerging from Silicon Valley was the guidance systems for nuclear missiles. These chips are now the foundation of the digital economy and national security. Cars have become rolling computers.

Banks are computers that manage the flow of money. American companies dominate the most advanced sectors of the industry. China, on the other hand, remains dependent on the outside world for its supply of quality electronic chips. And China intends to do the right thing.

The tariff war

Long before Donald Trump started his tariff war, China announced its intention to catch up. In 2014, Beijing announced the creation of an investment fund of one billion yuan (126 billion euros) to improve its national industry. China’s ambitions to create a high-tech industry worried Barack Obama and his administration, a wave of Chinese tenders for semiconductor companies confronted his administration during his last mandate. In particular, Barack Obama prevented Intel from selling some of its most potent chips to China in 2015. Other countries are also concerned, including Taiwan and South Korea, which have regulations in place to stop Chinese purchases of semiconductor companies and to stop the looting of intellectual property.

The limits of the Chinese offensive

Today, America has the advantage over China in the design and manufacture of high-end chips. With this war, the US can probably slow China down, but progress will be difficult to stop.

The attacks will even make China even more determined. Just as the emergence of Silicon Valley was based on the support of the American government, China combines the resources of the state and companies in the pursuit of its objectives. It has set up support and incentive programs to attract engineers from other countries, including Taiwan.

Companies like Huawei have proven their ability to innovate; the blocking of Intel chips in 2015 only encouraged China to develop its domestic supercomputer industry, such as the “Taihu-Light,” which is Chinese made. Also, China’s ambition to become a world power in the semiconductor field comes at the right time.

Automobile: China ready to conquer the world

While the Chinese automobile market has entered a phase of slowdown, the government wants to liberalize its highly-regulated market by a persnickety bureaucracy. It believes that the local brands have acquired enough maturity to conquer the world. For foreign brands, this liberalization is a real relief, but they could nevertheless continue their activity under the format of joint ventures.

It’s a big bang waiting for the Chinese car industry! Xi Jinping announced his intention to liberalize the sector, one of the most regulated in the world. The Chinese President made this announcement in response to the protectionist bidding of US President Donald Trump. In reality, it would seem that China is mainly preparing to change its industrial strategy in the automotive sector.

Strong slowdown

The world’s largest automobile market, with 27 million registrations in 2017, is experiencing a sharp slowdown in its market. In 2017, sales increased by only 2.1%, according to PwC. This slowdown is very brutal since, in 2016, growth was still at double digits (+14%).

Except that production capacity has not stopped increasing. New outlets must, therefore, be found to avoid the crisis of overproduction. All the more so as the Chinese are turning more and more to the second-hand market, an emerging market but one that will divert a large proportion of consumers away from the new market.

The end of the bureaucracy stage?

Until now, there were only two ways to sell cars in China: either by importing them, for 25% customs duties or by obligatorily building them on the spot through a joint venture with a local manufacturer. This last option is authorized after a careful and sometimes long study (up to one year) of the file by the Chinese administration which will issue a license. This license can be as restrictive as it is binding.

The license obtained by Renault prevented it, for example, from selling cars that were too small, such as its big success, the Captur, or too large. The diamond brand has thus launched itself on the Chinese market with the Kadjar and the new generation Koleos. Another constraint, the French manufacturer had the obligation to launch a specific local brand, as well as 100% electric cars. These are all very costly and complex constraints from an operational point of view.

Also, Renault is in charge of all operations, although it is a 50-50 joint venture with the Chinese group DongFeng. Here again, there is a source of difficulty since Renault is forced to form alliances with a group that has more than ten joint ventures, including with directly competing groups such as PSA or Honda. Not to mention technology transfers, and the impossibility of consolidating accounts.

Tesla, first beneficiary?

All these regulatory constraints could therefore soon disappear, including a sharp reduction in customs duties. Except Xi Jinping didn’t say anything more. According to the Wall Street Journal, regulation on electric car joint ventures could disappear this year, which could be a real boon for Tesla.

But according to experts, these measures may not lead to the expected big bang. Firstly, because what is true at central government level will not necessarily be true at a local government level, which would continue to be a lock on the deployment of concessions or car quotas for large conurbations.

“The real opportunity will lie on the margins, i.e. on the building rules, which will be relaxed. Foreign manufacturers will certainly benefit,” confirms Guy Burney of Deloitte.

General Motors wants to keep its 10 JVs

In addition, foreign car manufacturers have been working in China for too long in this format, some since the 1990s. And the largest have constituted real constellations of joint ventures (JV). General Motors is thus at the head of 10 JVs which enable it to hold 14% of the Chinese market (more than 4 million cars sold). According to the Wall Street Journal, the first American automotive group would have no intention of changing anything of this configuration even if the regulatory constraints are lifted. According to the American economic daily, the manufacturers fear to start a war without mercy with their former partners if they did not have any more common interests.

Because if Xi Jinping takes such an initiative, it is not only because its domestic market has reached maturity, it is also because local players have themselves acquired an industrial and technological maturity, as Guy Burney explains :

“China has not only been making cars for 30 years, but it has also learned a lot. And beyond that, it now can reproduce the convergence between Detroit and Silicon Valley, in other words between car manufacturing and new technologies. China has not only large and mature manufacturers, but also an ecosystem of digital and technological players with global reach.

Xi Jinping, therefore, wants to push its brands to advance their pawns towards foreign markets. In the first half of 2017, barely 3% of national production was destined for export, but this figure was up by 26%.


Donald Trump, Debt, Real Estate: What Could Slow Down the Chinese Economy in 2017

As the Chinese economy continues its structural slowdown, it will face significant challenges in 2017.

China’s economic slowdown

For the past 3 years, China has been experiencing a gradual drop of its GDP growth rate. According to experts, the economic slowdown is the result of the gradual slowdown in labor force growth (reinforced by the impact of the one-child policy) and the inevitable decline in productivity gains, as the economy is becoming more mature.

The credit boom and its consequences

While credit has steadily increased in recent years, much faster than the economic growth, corporate debt already reached 168% of the GDP in the third quarter of 2016, or nearly $ 18.5 trillion. With such a strong and rapid increase in credit, many unprofitable firms may find it difficult to finance in the event of tighter monetary policy in China. Credit is already getting stricter as the government decided in December to focus on risk reduction and financial stability, to the detriment of economic growth, implying measures to curb the credit. As a result, the amount of doubtful loans (loans with little chance of being repaid) may prove to be higher than what the official figures suggest. A phenomenon that could cause trouble…

The appreciation of the dollar against the yuan

Yuan weakened against US Dollar
Chinese Yuan Keeps Depreciating Against US Dollar

While the yuan (or renminbi, “currency of the people”) has already lost nearly 6% against the dollar in 2016, the upward trajectory of the US currency is a major challenge for Beijing. As China massively bought yuan currency to support its exchange rate, its foreign exchange reserves have melted by nearly $ 1 trillion, to $ 3 trillion in just two years. Beijing could also defend the yuan by implementing monetary tightening policy, but the room for maneuver of the PBOC (the country’s central bank) is limited, because of the size of the credit. The situation could be very worrying for the PBOC if the Federal Reserve (the US central bank) keep raising its exchange rate in 2017 as it has already been initiated by new Donald Trump government.

The real estate industry could slow down

One of the major pillar of China’s economic growth has been the development of the real estate sector over the past 10 years. In 2016, Chinese real estate grew strong, both in terms of construction and price increases. To cool down the overheated property market, local authorities have increased the share of minimum input required to purchase a property in order to lighten the use of mortgages. Consequently, the growth of the housing sector should slow down in the coming year.

Donald Trump threaten Chinese exports

donald trumpDonald Trump claimed during the election campaign that he would declare China a country manipulating his currency once he has become president and would impose heavy duties (up to 45%!) on US imports of Chinese goods.

In the end, China’s growth should continue to slow down in 2017 and the country will likely go through hard times in the coming months.