It’s said that 80 percent of new businesses fail within two years. Launching a company in a foreign culture makes the challenge even more difficult. But if you do your homework and cultivate your patience and will power, you can start a successful business in a strong market such as China.

Do Your Research

One of the first things you should do is become familiar with the five-year plan published by the Chinese government. Among other things, it outlines the type of businesses they welcome. This makes it easier if your industry falls into these categories.

Outsiders have been trying to grab a share of China’s booming business climate for decades. There are people all over the world who might share stories of successes and failures that can serve to guide your decisions.

One of the best ways to meet these people is to attend of China’s five major trade shows:

Beijing Auto Show
Shanghai Import and Export Commodity Fair
Canton Fair
Yiwu Trade Fair
Bauma Fair

What takes place at these shows is growing in influence as Chinese technology and the Chinese economy continue to improve.

Hire a Local Consultant

China’s economic growth in 2016 was 6.7 percent, exceeding expectations, and its disposable income grew accordingly. While the Chinese business markets continue to improve, there are still many challenges facing entrepreneurs who wish to establish a presence in China.

One step in ensuring a smoother process is to have someone with experience to advise you on registering a company there. A Chinese business consultant can help with filing the correct paperwork and act as your agent when you’re away. However, it’s up to you to do your diligence in finding an experienced consultant to work with.

Decide on a Type of Business Entity

In general, there are three business legal entities that entrepreneurs choose for operating a company in China.

Representative Offices

This is just what it sounds like, and not a separate legal entity from a parent company. As a result, there are certain limitations in China, particularly not being able to accept payment directly from Chinese clients. This is appropriate for something like a marketing or informational office. However, the Chinese government still expects you to pay taxes on any income that’s generated.

Joint Venture

A joint venture is a company controlled in a partnership between foreigners and Chinese business people. It’s usually associated with tech startups. Given the ongoing problems with protecting intellectual property in China, this could be risky. However, if your product falls into a specific category, such as a software release whether on or offline, you may be “restricted” so that a joint venture is your only option.

Wholly Foreign-Owned Enterprise

This is any company in China that’s wholly owned by foreign investors. It commonly takes the form of an LLC, or limited liability company, where each partner’s share is proportional to the amount of their investment. Depending on the nature of the company and the province where it’s located, you might also be required to register a bank deposit to ensure the payment of dividends. There’s also a complex legal process should you later decide to sell the company.

Work More. Work Fast.

In the U.S., it’s customary for employees to work a 40-hour week, eight hours a day. Chinese workers are used to 12-hour shifts, including Saturdays. Even if you want to call in your team for a Sunday meeting, it seldom raises complaints.

This additional labor time means you can carry out more projects and complete them more quickly.

However, it’s not unusual for a change in business strategy to happen after hours, depending on the situation, when you’re already home for the night. It’s even more important to implement efficient operational processes. Employees in the U.S. should be able to communicate, share data, and coordinate their efforts with their Chinese counterparts at any time in the course of project development.

Hiring in China

The employment scenario in China is rather different than American executives are used to, so it might be a good idea to work with a hiring agency or consultant in China. An alternative is to hire someone in the U.S. who’s experienced with Chinese business practices and instruct them in your company mission and values before sending them ahead to start recruiting on your behalf.

Ideally, this person should be fluent in Chinese, but that’s secondary to the need for real business acumen. This is vital, because they’ll essentially be building your company from the ground up on Chinese soil.

With a trusted manager in place, you can start developing your workforce to encompass the skills and talents you need. You should also stress the importance of signing contracts and publishing employee handbooks or codes of conduct that cover disciplinary actions such as firings. If you don’t, you could find it difficult to fire anyone without facing a lawsuit in the Chinese courts.

To sum it up, China’s booming economy and technology pose a significant opportunity for foreign business leaders. To succeed, however, it’s essential that you’re familiar with Chinese laws, as well as conditions in China regarding labor practices, and able to communicate effectively. Whether you hire consultants or work out the details yourself, there’s potentially a huge market there for Western goods and services.

Jen McKenzie is a self-employed author hailing from New York, NY. She writes extensively on business, education and human resource topics. When Jennifer is not at her desk working, you can usually find her hiking or taking a road trip with her two dogs. You can reach Jennifer @jenmcknzie

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