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Is Opening a Business in China a Good Idea?

5 Min Read

Every investor is headed to China. From manufacturers to e-commerce enthusiasts, China is seen as the starting point to reach multinational status. Therefore, should you also head to China?  This post is a closer look at China as one of the best offshore investment jurisdictions to help you make the big decision on whether opening a business in China is a good idea

Important Facts about China

The most notable fact about China is its large population. With more than 1.4 billion people, you are sure of having a ready market. Therefore, it will no longer be about where to get the market but how to optimize sales. Here are other important facts about China that you should know when considering opening a business in China.

  • Since 1979 when China adopted economic reforms, the country’s GDP has grown at an average rate of 10%.
  • Between 1978 and 2014, China’s per capita GDP grew about 49 times. During the same period, the country lifted more than 800 million people out of poverty.
  • The country’s Nominal GDP (2021) is estimated at $116.64 trillion. This makes it the second largest on the globe.
  • China’s GDP is the largest on the globe when measured by purchasing power parity.
  • GDP per capita of China is estimated at US$10.500.
  • The private sector in China is the main driver of employment and growth in China.
  • The service sector contributes 51% of the GDP, while industry and agriculture contribute 40.5% and 7.9%, respectively.

Unique Benefits that Make Opening a Business in China a Good Idea

When you take a closer look at the numbers above, they all point at an offshore jurisdiction that is ready to help investors grow their ventures to the next level. Here are additional benefits to expect for taking your business to China.

  • China can Serve as a Springboard for Your Company into a Global Multinational

Opening a business in China gives you not only access to the local market, which is impressively large but also the global one. First, China is strategically located in the Far East, making it easy for you to access neighboring markets with your products. So, when you open a business in China, make reaching Thailand, Australia, Singapore, and Japan, among other neighbors, your target. Because China is a member of Asia-Pacific’s (APAC) recently signed Regional Comprehensive Economic Partnership (RCEP), accessing the involved countries will be pretty easy.

China has also signed other bilateral trade agreements with countries such as Iceland, Chile, and Switzerland. These markets will be within reach. Another lovely thing about the country is that its administration never gets tired of looking for new markets. So, you can expect that a lot more will be available in the coming years to help your business to grow even faster.

  • A Supportive Administration 

For any jurisdiction to be considered good for investment, it requires a good administration. The Chinese government has taken note of this and is willing to go to any length to ensure all businesses become successful in the country. This is evident through progressive reforms that started in 1979. These reforms have opened the country to foreign investors and given them incentives to come and invest in the country. For example, you can open a wholly foreign-owned enterprise (WFOE) that allows 100% foreign ownership. Taxes are also very low, especially if your company is based in free trade zones and away from the coastal cities.

  • Stable Business Environment 

In business, economic, social, and political stability are crucial requirements for success. In China, its currency has been pretty stable and cases of hyperinflation are rare. When it comes to social and political stability, China also scores impressively. This stability makes planning and prediction for your company easy.

As you can see, China is an awesome country that is doing everything possible to help companies grow and become more successful. Therefore, opening a business in China is an excellent idea for you. Remember that you must start with company incorporation in China. Make sure to work with an agency of experts to help you navigate through the complexities of market entry and growth.

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