Danai Krokou - The Chinese Market: Entry Methods & Investment Strategies

The Chinese Market

The Chinese Market

Entry Methods & Investment Strategies

Danai Krokou

The Chinese Market: Entry Methods & Investment Strategies

Copyright Business Expert Press, LLC, 2021.

Cover design by Danai Krokou

Interior design by Exeter Premedia Services Private Ltd., Chennai, India

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any meanselectronic, mechanical, photocopy, recording, or any other except for brief quotations, not to exceed 400 words, without the prior permission of the publisher.

First published in 2021 by

Business Expert Press, LLC

222 East 46th Street, New York, NY 10017

www.businessexpertpress.com

ISBN-13: 978-1-63742-032-4 (paperback)

ISBN-13: 978-1-63742-033-1 (e-book)

Business Expert Press International Business Collection

Collection ISSN: 1948-2752 (print)

Collection ISSN: 1948-2760 (electronic)

First edition: 2021

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To all of you who dare and take risks...

China has telescoped in one generation what other countries took centuries to achieve. No country has managed to accomplish so much in such a short time. Chinas unique attempt to complete two transitions at oncefrom a command to a market economy and from a rural to an urban society, is without historical precedent.

The World Bank, China 2020: Development and
Challenges in the New Century

Description

With its dual appeal as the worlds factory and the largest consumer market worldwide, China is about to become the preferred playing field for American and European businesses with global ambitions. Chinas massive global development project, the Belt and Road Initiative (BRI), now includes more than two-thirds of the worlds countries. In the coming years, the most promising entrepreneurs and most ambitious companies will be growing in China, with China. Entering the Chinese Market aims to assist Western businesses and entrepreneurs to understand and effectively enter the Chinese market. An essential factor for the success of investors and professionals engaging in business in or with China is being able to understand and correctly set up a sustainable and effective corporate structure. This book discusses different company structures, their functions, and their respective liabilities and provides practical and operational observations.

The book details all applicable decision-making processes to help you choose the most suitable structure based on your business scope, specific needs, and available capital when entering China. In addition, it discusses all relevant rules, regulations, documentation, and management issues related to the establishment of different types of structures such as WFOEs (wholly foreign-owned enterprises), representative offices (ROs), joint ventures (JVs), and other forms of investment. Topics covered in Entering the Chinese Market also include tax, legal, intellectual property rights, common pitfalls, and ways to address them.

Keywords

China investment; company structure; WFOE; U.S.China joint ventures; U.S.EU joint ventures China business; China investment; Chinese market; China strategy; China corporate structure; entry methods; market entry

Contents

China is the uncontested El Dorado of the 21st century. The rapid rise of China as a leading economic power within a time frame of about three decades is often described by financial analysts as one of the greatest economic success stories of modern times. The story of the Western worlds fascination with China dates back more than two millennia and began with a product that remains the symbol of this relationship: silk. Silk gave rise to the first myth of Chinese trade and the perception of the Silk Road as the main commercial avenue of antiquity. In recent decades, Chinas economic growth has been accelerating at speeds the world has not witnessed since the 19th-century Industrial Revolution. With its dual appeal as the worlds factory and the largest consumer market worldwide, China has become the preferred playing field for businesses with global ambitions. In the next coming years the worlds most promising entrepreneurs and most ambitious companies will be growing in China, with China.

While there are still important challenges for Western businesses operating in China, the business environment and market access for foreigners has significantly improved over the last decades. China climbed the World Bank ease of doing business ranking by 15 places in 2019. It now ranks higher than many European countries. China has evolved into a dynamic, fast-paced environment offering a plethora of opportunities to challenge-driven companies and business adventurers. It has emerged as one of the most aggressive countries promoting 5G technology (the fifth generation of cellular network technology) and is predicted to become the worlds largest 5G market by 2025. Chinas strategy for achieving global technological dominance manifests throughout the countrys signature foreign policy, the Belt and Road Initiative (BRI), an externally oriented development program designed to increase Chinas presence and investments in countries around the globe and to expand markets for Chinese products. Sustained high growth rates over the past several years have been rapidly transforming China into an industrialized economy. The current downturn is the first of such magnitude since the 2008 financial crisis. Back then, considerable reductions in production were recorded for four consecutive quarters after the crisis, but exceptionally high increases were also reported in subsequent quarters. It remains to be seen whether the COVID-19-induced economic crisis will follow a similar growth pattern. With the advent of coronavirus, the challenges and uncertainties that dominated previous years such as higher trade barriers and Brexit have clearly moved to the background. COVID-19 has forced governments to intervene in the world economy. While the full impact of the containment measures remains uncertain, in the beginning of 2021 Chinas economic recovery is gaining momentum. While much of the world continues to struggle with the virus, Chinas recovery has been relatively speedy. One of the most encouraging parts of Chinas recovery has been the recent rebound in consumer spending. At the same time, Joe Bidens presidency is expected to follow a more rational approach to bilateral trade between the United States and China. While political tensionsdue to the recent human rights abuse in Western Xinjiang and the erosion of freedoms in semi-autonomous Hong Kongare expected to continue, Bidens administration is expected to return to rules-based, free-market trade relations with China.

Entering the Chinese Market aims to assist Western entrepreneurs, businesses, and investors to understand and successfully enter the Chinese market. It is designed to work as a step-by-step guide to those businesses seeking to understand the investment strategies available to foreign companies operating in China and remain competitive in the tremendously challenging and profitable market that is China at the start of the third decade of the 21st century. My book Entering the Chinese e-Merging Market focused on the procedures and strategies that Western companies need to follow in order to enter Chinas electronic market, a process that requires smaller amounts of investment.