How To Start A Business In China?

how to start a business in china

Are you on the precipice of establishing your foreign business in China but feeling a bit overwhelmed by the process? You’re certainly not alone and it’s completely natural to feel this way.

Let’s take a moment to absorb an interesting fact, even amidst the pandemic, foreign direct investment into China soared by 6.2% reaching $149 billion in 2020. Incredible, isn’t it? Having successfully maneuvered through this complex journey myself, I want to make things more comprehensible and manageable for you.

Starting a business in China in 2024 comes with a unique set of opportunities and challenges. Understanding the current trends is crucial for entrepreneurs aiming to penetrate the Chinese market successfully. Here are five key trends to consider when launching a business in China, leveraging platforms like Douyin and Xiaohongshu (RED), and utilizing the influence of KOLs (Key Opinion Leaders):

1. Douyin E-commerce Integration

  • Ecommerce Insight: Douyin, the Chinese counterpart of TikTok, has become not just a social media powerhouse but also a robust e-commerce platform. In 2024, leveraging Douyin’s e-commerce capabilities will be essential. Businesses can use Douyin’s in-app shopping features, which allow users to purchase products directly through the app while watching a video.
  • Implementation Strategy: Create engaging and visually appealing product demonstrations and leverage Douyin’s live streaming feature to host live sales events. This can drive impulse purchases and increase product visibility.

2. Viral Marketing on Xiaohongshu (RED)

  • Trendy: Xiaohongshu (RED) is a platform that blends lifestyle blogging with e-commerce. It is particularly popular for its trustworthy user-generated content and reviews. Going viral on Xiaohongshu can significantly boost brand recognition and credibility.
  • Strategy: Focus on creating high-quality, relatable content that resonates with the lifestyle aspirations of the Chinese audience. Encourage user-generated content and reviews to enhance authenticity and trustworthiness.

3. Utilizing KOLs for Brand Trust

  • Insight: KOLs continue to wield significant influence over consumers’ purchasing decisions. Their endorsement can provide a substantial credibility boost.
  • Implementation Strategy: Partner with KOLs who align with your brand’s values and audience. Develop long-term relationships rather than one-off promotions to build deeper trust and continuity with audiences.

4. Focus on Business best Practices

  • For example, Environmental concerns are increasingly becoming a priority among Chinese consumers. Businesses that adopt sustainable practices are likely to stand out and attract environmentally conscious consumers.
  • Highlight sustainable practices in your business operations. Use eco-friendly materials, reduce carbon footprints, and ensure that these green initiatives are prominently featured in your marketing campaigns on all platforms.

5. Technological Innovations and AI Integration

  • Trend Insight: As China continues to lead in technological innovation, integrating AI into business operations can provide a competitive edge, particularly in industries like retail, manufacturing, and services.
  • Implementation Strategy: Implement AI for personalized customer experiences, predictive analytics, and operational efficiency. Showcase these innovations through your digital platforms to emphasize your brand’s modernity and efficiency.

This article is designed as a step-by-step guide that will make your entry into the dynamic Chinese market much smoother than you might imagine right now! Excited about exploring new avenues toward success in China’s vibrant marketplace? Well then, let’s dive straight into it!

Key Takeaways

  • Choose the right business location in China that aligns with your brand and consider local rules and laws.
  • Select a suitable legal structure for your foreign company in China, such as a foreign-invested enterprise or partnership.
  • Develop a comprehensive business plan by conducting market research to assess viability and make informed decisions.
  • Open bank accounts in China, including an RMB Basic Account and Foreign Currency Capital Account, to simplify financial operations.
  • Protect your intellectual property through audits, classification, business registration, and monitoring for counterfeit goods and infringement.
  • Hire qualified Chinese staff who understand the local market or consider working with a market entry consulting agency.
  • Expand into the Chinese digital market through selling on e-commerce platforms, creating a Chinese website, and promoting on social media.
China foreign direct investment annual inflow 2012-2022

Benefits and Challenges of Starting a Business in China

Doing business in China comes with its own set of benefits. As a young entrepreneur, you’ll see that China supports new ideas, start-ups, new businesses. State aid is not hard to find here. Not just that, financial groups and rules bodies are also keen on helping out local businesses.

This gives Chinese firms an edge over your company from abroad.

Yet, large markets await your work in China too. Expand and grow – there’s enough room for everybody! But as a foreign firm, this might not be easy sailing the whole time. The business scene here has many layers; you have to know what they are before diving in headfirst! Cheating or shady deals aren’t uncommon either so keeping eyes open will serve well when setting up shop over there.

Bumpy rides may come as cultural rifts make their way into everyday dealings between companies and red tape can snag things up sometimes as well.

How to start a start-up

Steps to Start a Business in China for Foreign Companies

To start a business in China as a foreign company, you need to choose a business location, select a legal structure, create a business plan, open a bank account, and protect your intellectual property.

Pick a Business Location

Picking the right place for your business in China is key. It must match your brand well. You can find more help to set up shop if you pick a suitable city and spot. This will also make it easy to get through all the steps to sign up for your business.

You need to know about the rules in cities when you choose one. As an example, some cities may have laws that won’t fit with what you do. Knowing who lives there helps too so you can hire good workers for your business in China.

Choose a Legal Structure

Picking the right legal structure for your business is key. It sets how you’ll work in China. You could set up a foreign-invested enterprise or use the Partnership Enterprise Law. This law lets foreigners invest in partnerships here.

There are many ways to do this, known as investment vehicles. The best one for you links with what you want from your business, so put thought into this! Do all the needed research and ask experts if need be.

This helps make sure you follow all local rules and laws when starting your operations.

Chinese laws

Do not Create a Business Plan

All insitution, will tell you to work on a business plan

What you need is a business model , and have idea of your income and cost to get the viability of your business

Open a Bank Account, easy in China

To start a business in China as a foreign company, one of the important steps is to open a bank account. When establishing your business, you’ll need to open at least two bank accounts: an RMB Basic Account and a Foreign Currency Capital Account.

This is required by law. Opening a bank account in China involves a process that includes pre-application preparations. Having a local bank account can simplify your business operations in China, making it easier for you to manage finances and conduct transactions.

It’s also an obligation for a foreign investor who has foreign-invested enterprises in China. Keep in mind that the procedure for opening a bank account may vary depending on the year, so it’s important to stay updated with the latest requirements and regulations when going through this process.

bank of China

Protect Your Intellectual Property

Protecting your intellectual property will avoid headack in the future 🙂

Foreign companies should have a clear understanding of IP protection and enforcement in China. Register your patents, trademarks, and copyrights with the appropriate authorities to establish legal rights.

Be vigilant against counterfeit goods and infringement by monitoring the market and taking action when necessary.

We have contacts for that Email us

protect you brand in china - Trademark-Office-National-Property-China

Hiring Chinese Staff , complicated

When starting a business in China, one of the most important decisions you’ll make is hiring Chinese staff. The success of your company relies heavily on the quality and expertise of your employees.

This is the most complicated step for me 🙂

It’s crucial to find qualified individuals who understand the local market and can help your business thrive.

Alternative : Working with partner or Agencies

To navigate the complexities of hiring in China, working with a market entry consulting agency can be extremely beneficial.

These agencies have extensive knowledge and experience in entering the Chinese market, and they can provide valuable guidance throughout the recruitment process.

One option for hiring employees in China without establishing a local company is through an Employer of Record service. This allows you to outsource all employment responsibilities to a third-party provider, who will handle payroll, HR administration, compliance, and other legal requirements on your behalf.

PS : we are a Marketing agency 🙂

By leveraging local expertise through a consulting agency and ensuring effective staff hiring practices, you can increase your chances of success in navigating the Chinese market. Remember that recruiting qualified Chinese staff is key to building strong customer relationships, understanding cultural nuances better, and taking advantage of local opportunities.

Hiring Chinese Staff

Crossborder: Consider the Digital Alternative

Expand your business reach by tapping into the vast potential of the Chinese digital market. Sell on popular e-commerce platforms, promote your brand on social media, and protect and grow your online reputation.

Sell on Chinese E-Commerce Platform

Selling on a Chinese E-Commerce platform can be a great way to enter the Chinese market. Here are some steps to consider:

  • Research the different platforms available, such as Tmall Global, JD Worldwide, and Kaola. These platforms have a large customer base and can help you reach Chinese consumers.
Cross border E-commerce sales in china
  • Understand the legal requirements for selling in China. This includes obtaining the necessary licenses and permits, as well as complying with regulations and customs procedures.
  • Create an attractive online store on the platform of your choice. This involves optimizing your product listings with high-quality images and detailed descriptions in both Chinese and English.
  • Consider partnering with a local logistics provider to handle warehousing, packaging, and delivery of your products within China. This will ensure fast and reliable shipping to your customers.
  • Promote your products through targeted marketing campaigns on the platform and other digital channels. Use keywords relevant to your target audience to increase visibility and drive traffic to your store.
tmall cosmetic

Have a Chinese Website for your Brand

Having a Chinese website for your brand is essential if you want to expand your business in China through cross-border e-commerce. It allows you to directly sell your products to Chinese consumers on international e-commerce platforms.

However, building a Chinese website requires careful consideration and is not as simple as in other markets. To launch a .CN Chinese website, it is important to have an established presence in China, such as a subsidiary office or a local partner.

This will help you establish credibility and attract more Chinese customers. Keep in mind that China’s e-commerce market is the largest in the world and has been growing rapidly, so having a Chinese website can greatly benefit your brand’s expansion efforts.

health supplement brands chinese website

Promote on Chinese Social Media

Promoting your business on Chinese social media platforms is a crucial step to reach and engage with Chinese consumers. Here are some effective strategies to consider:

  1. Utilize popular platforms: WeChat and Weibo are widely used in China. Make sure to create accounts on these platforms to connect with your target audience.
  2. Create engaging content: Develop content that resonates with Chinese consumers. Consider cultural differences when crafting your messages and visuals.
  3. Collaborate with influencers: Partnering with influential personalities can help increase brand visibility and credibility. Find influencers who align with your brand values and have a large following.
  4. Run targeted ads: Use targeted advertising options on social media platforms to reach specific demographics, interests, and locations. This will allow you to focus your marketing efforts on the right audience.
  5. Utilize user-generated content (UGC): Encourage users to share their experiences with your brand by incorporating UGC campaigns. This helps build trust and authenticity among potential customers.
  6. Engage with followers: Interact regularly with your followers by responding to comments, messages, and reviews. Show genuine interest in their feedback and address any concerns promptly.
  7. Leverage livestreaming: Livestreaming is extremely popular in China, offering an interactive way to showcase products or demonstrate services in real-time. Consider incorporating livestream sessions into your social media marketing strategy.

Protect your E-Reputation

Managing and enhancing your online reputation is crucial when doing business in China. With the increasing importance of social media, it’s essential to establish a strong online presence and manage your brand image effectively.

To protect and grow your e-reputation, it’s important to proactively monitor and respond to online reviews. This includes addressing any negative feedback promptly and professionally.

Additionally, make sure that the information about your business online is accurate and up-to-date. By employing reputation management strategies and utilizing tools designed for monitoring, protecting, and building your online reputation, you can ensure that your business maintains a positive image in the digital landscape of China.


Launching a Business on Douyin in China: An opportunity in 2024

Douyin, the Chinese version of TikTok, is a Game changer…

I know what you think 😉 BUT it not just a platform for entertainment but a powerhouse for brand marketing and engagement. With over 600 million active daily users, Douyin offers a fertile ground for businesses aiming to penetrate the Chinese market. It combines rich multimedia content creation with the virality of social media, making it an essential tool for brands looking to make an impactful entry into China.

Douyin for New Businesses, what CEOs need to know

1. Video Marketing Dominance: Short-form videos are the heart of Douyin. They provide a dynamic way to showcase products and services, tell brand stories, and engage with users through visually appealing content.

2. Influencer Collaborations: Partnering with KOL – livestreaming on Douyin can significantly amplify your brand’s Turnover. Oh yes, Chinese Influencers with large followings and high engagement rates can introduce your brand to their daily audiences

3. E-commerce : Douyin has seamlessly integrated e-commerce capabilities, allowing users to purchase products directly through the app. 2024 tips… “Launching flash sales,” live demos, and interactive shopping events are powerful strategies to drive conversions directly from your account.

4. User-Generated Content (UGC) Campaigns: Encouraging UGC can increase engagement and brand loyalty. Competitions, challenges, and rewards for user participation can create buzz and foster a community around your brand.

5. Video Content : it is very difficult and cost a bit for Brands. BUT havce a tailoring content is base of Douyin . Good Content that resonates locally can boost relatability and user interest, enhancing overall engagement. Bad content, is a waste of money.

Best Cities for New Brands in China on Douyin

1. Tier 1 Cities (Beijing, Shanghai, Guangzhou, Shenzhen): These cities are tech-savvy and have higher disposable incomes, making them ideal for introducing new and innovative products. Brand receptivity is high, and the potential for viral trends is substantial.

2. Emerging First-Tier Cities (Chengdu, Hangzhou, Wuhan): These cities offer a blend of large, engaged audiences with slightly less competition than the traditional first-tier cities. They are also known for being cultural trendsetters within China.

Best Practices for Lead Generation on Douyin

1. Interactive Video Content: Brands have to create Good content, sorry cheap solution is not working.

2. Lead generation, Clear Call-to-Actions (CTAs): Ensure that each video has a clear CTA, guiding users on what steps to take next — whether it’s visiting a website, joining a mailing list, or checking out a product

3. Use of Douyin’s Advanced Ads : Utilize Douyin’s Best ever native advertising tools such as precise targeting and retargeting capabilities to reach potential customers based on their interests, behaviors, and previous interactions with your content. Douyin ads Works super Well because douyin know your interest.

4. Regular Monitoring and Optimization: Continuously track the performance of your campaigns and tweak your strategies based on data-driven insights. Douyin offers comprehensive analytics that can help refine targeting and improve ROI. We all want ROI 😉

Entering the Chinese Market: need a partner in China?

We can help you

Starting a business in China may seem daunting, but it can be a highly rewarding endeavor with the right guidance. With an annual inflow of foreign direct investment (FDI) to China from 2012 to 2022, the Chinese market continues to be a hotspot for global entrepreneurs.

At our agency, we offer 20 years of invaluable experience in this field, making us your trusted partner in navigating the intricacies of the Chinese business landscape. If you’re considering tapping into this lucrative market – we’re here to help.

From selecting the optimal location for your venture to safeguarding your intellectual property, we provide comprehensive support and insights at every step. By understanding the unique dynamics of the Chinese market and establishing fruitful local partnerships, you can not only overcome challenges but also seize the abundant opportunities it offers.

With determination and adaptability, you can flourish in this dynamic and ever-evolving business environment. So, take that leap of faith and embark on your journey towards entrepreneurial success in China. Contact us today, and let’s embark on this exciting venture together!


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