Country GuideChina

From Global Connections

China is the world's largest recipient of foreign direct investment (FDI); FDI into the Chinese mainland rose 6.4 per cent year on year to USD126.27 billion in 2015.

China ranked 84th in the World Bank's 2016 Doing Business rankings, falling one place from 83rd in the year prior. China rated highly in the category Enforcing Contracts where it ranked seventh in the world. Its weaknesses were in the Dealing with Construction Permits and Starting a Business categories, where it ranked 176th and 136th, respectively. The rankings recognised that China had made paying taxes less costly for companies in Shanghai by reducing the social security contribution rate.

Key facts about starting a business in China:

  • It takes 11 procedures and approximately 30 days to start a new business in China; this process is detailed in the Doing Business in chapter
  • Non-nationals wishing to work in China must obtain a visa (Z or R) and a residence permit; employment regulations are discussed in detail in the Labour chapter
  • Requesting and obtaining a construction project planning permit takes approximately 35 days
  • All businesses must comply with the Accounting System for Business Enterprises and Auditing Standards; further details can be found in the Audit chapter
  • Companies wishing to list on the Shanghai or Shenzhen stock exchanges must have been profitable in the three years prior to application; this is discussed further in the Finance chapter

China's attractiveness as an investment location can be attributed to a number of factors, including its vast domestic market and growing middle class. Nevertheless, in order to make an informed decision, it is critical to understand the nuances of any local regime. The manner in which people conduct business in China may differ from the home countries of investors. Furthermore, variations on these distinctions may exist depending on the region and industry in which a company operates.

China's official language is Mandarin. However, there are many dialects spoken across the regions of the country. English is widely used in businesses. Dress codes in the workplace are typically conservative and understated.

Punctuality is expected when doing business in China. A handshake is the typical business greeting. Business cards will usually be exchanged after initial introductions. Gift giving is not expected as part of business interactions.

Those looking to establish a business in China may look across Asia for alternative options. However, China can be differentiated on the following factors:

  • China is the world’s second largest economy
  • China is the biggest domestic market in the world with over 1.3 billion potential customers
  • China ranked 28th in the world in the Global Competitiveness Index
  • The government provides a number of tax incentives. This includes a preferential income tax rate of 15 per cent for High-New Technology Enterprises.; the tax regime is detailed in the Taxchapter
  • In 2015, the National Development and Reform Commission approved investment projects of RMB1 trillion for the development of the country's transport infrastructure; further details can be found in the Infrastructure chapter
  • China has signed 13 Free Trade Agreements, with many more under negotiation; discussed further in the Trade chapter

While China is clearly at the forefront of global foreign investment flows, there are still a number of challenges for foreign businesses. Restrictions to foreign investment in certain sectors and high levels of bureaucracy often hinder foreign companies' investment efforts. Furthermore, a lack of transparency, wide levels of corruption and a lack of intellectual property rights enforcement contribute to a difficult business environment; further details on the legal regime can be found in the Legal chapter.

This guide has been developed to provide businesses with an overview of China, its legal regime, start-up and market entry considerations, tax and customs requirements and a general summary of the factors that may affect the decision to do business in China. However, the information contained in this document is generic in nature and you should not act or rely on it without obtaining specific professional advice.

Please note that the Country Guides may only be available in English.

Useful Links

1 State Administration for Industry and Commerce
2 State Administration Of Taxation
3 General Administration of Customs
4 Ministry of Foreign Affairs
5 Industrial Property Office
6 The Ministry of Industry and Information Technology
7 Invest in China
8 Ministry of Human Resources and Social Security

 

Sources

1 FDI Statistics
2 China Doing Business Rankings
3 Global Competitiveness Index
4 Infrastructure

 

Download Country Guide - China (1.62MB, PDF)

Disclaimer

This document is issued by HSBC Bank (China) Company Limited (the Bank). This guide is a joint project with Grant Thornton. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. It is not intended for distribution to anyone located in or resident in jurisdictions which restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further distributed by any recipient. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining specific professional advice. Whilst every care has been taken in preparing this document, the Bank and Grant Thornton makes no guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or Grant Thornton be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and are subject to change without notice. The materials contained in this document were assembled in January 2016 and were based on the law enforceable and information available at that time.

Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton International Ltd (GTIL) and its member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. This publication has been prepared only as a guide. No responsibility can be accepted by GTIL for loss occasioned to any person acting or refraining from acting as a result of any material in this publication.

HSBC retains all responsibility for the translation of the content of this guide. In the event of any discrepancy or inconsistency between the English and translated versions of this Guide, the English version shall apply and prevail.

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