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China is relatively restrictive when it comes to setting up businesses although
this is changing. The government is keen to attract foreign investment but
most are in the form of joint ventures (JV) between foreign and Chinese companies.
This is particularly true in such industries such as the media. Other sectors,
such as that of telecommunications service providers, cannot even be minority-owned
by foreigners, while telecommunications equipment makers are usually all joint
ventures.
This is not to say there are no exceptions. Many smaller foreign companies
have succeeded in setting up wholly owned foreign enterprises. It is increasingly
common for a foreign investor to begin with a JV partner to facilitate setting
up a business and dealing with government officials. Eventually, these foreign
investors simply buy out the JV partner. The practice may seem ridiculous,
but many believe it is better to make a one-off payment than continue having
to pay salaries etc. for years to come.
The best rule of thumb is to investigate thoroughly any business opportunity
before talking to any prospective partner. In many ways, China resembles the
Wild West where anything goes. Chinese partners are often invaluable to navigate
the murky depths of business in China and facilitate the setting up of a business.
But be warned: Many foreign companies have found that the elaborate, unwritten
code of rules which applies to everything-whether it is negotiating a contract
or selling your product-often results in business disputes. Keep your eyes
wide open and visualize any eventuality, particularly bad ones.
Best for business
Generally the best way to find out how to set up a business in Shanghai is
to contact your local consular office and inquire about the opportunities and
restrictions which affect people of your nationality.
Usually there is a government agency that has at least basic information on
the steps a foreigner needs to take, numbers he needs to call and documentation
required. You can try the Shanghai Ya Xin Business Consulting Co. for assistance
in market entry. They are a US-registered joint venture company.
Shanghai Ya Xin Business Consulting Co.
Room 1505, 185 Si Ping Road, Shanghai
Tel: +86-21 6507-8381
Fax: +86-21 6507-8382
Shanghai and the surrounding environs all have special economic zones (SEZs)
which offer different tax incentives etc. The best way to get this information
is to contact your consulate in Shanghai or the Chinese consulate in your home
country. The new financial and industrial/manufacturing center of Pudong is
also one of the best bets for tax writeoffs and other incentives. You can try
contacting the:
Economic and Trade Bureau of the Shanghai Pudong New Area
Room 7Q, First Trade Tower 985 Dongfang Rd.
Pudong New Area, Shanghai
Tel: +86-21 6876-7019; 6876-1766
Fax: +86-21 6876-1766
Business visas
Before you come to China you must get a travel visa. For business people,
the best is a multiple entry visa that is good for six months. You CANNOT get
one at the Shanghai Airport and they will promptly ship you back from whence
you came without one. A work permit must similarly be arranged before you arrive.
Both can be extended once you are here provided your passport is in good order
and you have the appropriate letters from the company you are working with
or for here in Shanghai.
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