Business in China

Business in China

Companies have increased their interests in developing markets that provide cheap skilled workforce and substantial market potential. China is one of the most important destinations that multinational companies orient towards when deciding to expand their business on international level. However, there are several factors that must be taken into consideration when analyzing China. The business environment in China and the regulations in this country are much different from those in Western countries, and they must be thoroughly analyzed in order to decide whether this option is suitable for the company in case.

The application procedures for the establishment of companies in China are different in accordance with their type of ownership. Therefore, wholly foreign-owned companies benefit from procedures that more simple to apply. It is recommended that companies focus on this type of ownership. Another important aspect that companies are interested in is represented by the import and export chart. In the case of China, this chart is not that simple, as it starts with the filing and registration of foreign trade operators, and the appointment of the foreign trade corporation (HKTDC, 2008). The process continues with the customs registration, the application of quotas and licenses, foreign exchange formalities, application for inspection, customs formalities, verification and cancellation of formalities. This process can also be affected by political factors in the case of certain companies. In addition to this, the approval of documents required in customs declarations is characterized by complex processes.

Tax administration is another factor of influence on international businesses. The small scale taxpayers and the general taxpayers are affected by different methods of computation. The most important taxes that companies must pay in China are represented by VAT, consumption tax, customs duty, business tax, enterprise income tax, individual income tax, land appreciation tax, urban real estate tax, stamp duty, vehicles license tax.

Another factor that must be taken into consideration is represented by the business etiquette in China. Business etiquette in this country is significantly different than that of Western countries, but it is similar to other Asian countries. The analysis of business etiquette is based on the cultural dimensions that characterize the Chinese population. Same as in the case of other Asian cultures, China has a high long-term orientation, which means that the country's population has a strong attitude on persevering. Also, there is a high level of power and wealth inequality within the society. The Chinese culture is a collectivist one, and businessmen should refer to this fact in their meetings with Chinese partners (International Business Center, 2008).

The differences between the business etiquette in China and those in other countries refer to aspects like the appearance and clothing style, the behavior at meeting, offering and receiving gifts, and communications. The Chinese businessmen value certain things that their foreign partners do not allow great importance. Therefore, it is important to improve their business etiquette knowledge.