investment in China

China has not only enjoyed an astonishing growth in the past 30 years since it adopted an open door policy in 1978, but it is also one market that has countless mentions in all major newspapers around the world every day. China is no longer a market for major multinational corporations anymore, many small and medium enterprises are setting up their operations to enjoy the huge market potential.

Factors to consider in choosing the type of vehicle include:

  • Complex or importance (e.g. a major development) – a company may choose a joint venture. Management styles of mainland and foreign companies maybe very different. Disputes are not uncommon.
  • Confidentiality /key processes – a company may wish to choose a WFOE.
  • Regulatory landscape – the changes in China’s legal environment may require a business to change its operating model. Businesses such as telecommunications, publications, printing and securities firms are required to be in joint venture with a local Chinese party.

Some issues to consider:

  • The vast geographical area of the country means that aside from the ‘big picture’, each province has its own norms and ‘way of doing things’, hence, getting consistencies across the provinces may poses some chal- lenge.
  • Processing time for each vehicle maybe different depending on the type of vehicle. Some approvals could take as long as 6 to 12 months or longer. Depending on the size of investment and the type of industry, approvals may need to be sought from the central government.

investment _in_china