Starting a Small Business in China

Image result for Starting a Small Business in China China Economic ReviewChina is a country with an economy that is growing and developing quickly, and it’s viewed as one of the strongest economies in the world, second only to the United States in size. It’s become synonymous with manufacturing in all sectors, and the world’s biggest businesses like Apple, Google, and Facebook all have strong connections to China.

There are many positive aspects to setting up a business in China, and it’s becoming an increasingly popular option for entrepreneurs from many other countries. Whether it’s a possibility you’ve never considered, or it’s an idea you feel enthusiastic about, there are some facts you should know about China to get you started on the right path.

Economy

The second largest in the world, China’s economy is growing at a faster rate than any other country. It’s also the premier exporter and importer in the world. Benefits of having a business in China include:

  • Cheaper manufacturing rates
  • High-quality technology
  • Productive workforce
  • Lower staff costs
  • Government investment in infrastructure
  • Well-established trade routes

Industrial diversity

China’s strength economically is in part due to the diversity of industries operating within its borders. Leading sectors for small businesses include:

Manufacturing

China is well-known for its manufacturing prowess, and with companies like Apple and Microsoft having their products made here, the country has gained a reputation for being able to produce the highest quality technological products.

China doesn’t just make iPhones and laptops, however; there are plenty of opportunities to source your manufacturing in an extensive range of other sectors, from prams and pushchairs to electricals and homewares. Some of the most successful examples of small-scale manufacturing are in:

  • Shoes
  • Handbags
  • Cases
  • Electronics
  • Gadgets
  • Jewelry
  • Mobile phone accessories

Healthcare

Healthcare products in a range of niches are all showing healthy growth and profitability. People are increasingly health conscious and are prepared to pay for anything that can help them lead a longer, healthier life, and look better at the same time. Three key sectors within healthcare are:

  1. Herbal and dietary supplements

Chinese herbal medicine is a respected form of traditional healing that has become popular worldwide. Your easiest route into making money from health supplements is by coming to an agreement with existing manufacturers to sell their products, but if you have the knowledge and investment capability, then you could start a whole new brand.

  • Pharmaceuticals

Pharmaceuticals are profitable the world over, and even more so in China where raw materials and labor costs are lower. The complication with this lucrative trade is that it is more tightly regulated, so you would need to obtain a license in order to operate. You’d also need to be aware of the import and manufacturing requirements in other countries if you intended to sell your products abroad, as they can vary from country to country, and in some cases may be prohibited.

  • Beauty products

Health and beauty is another global sector that could be exploited from China. Skincare, for example, is a booming market, and the latest trend among Western women is the flawless, natural look originating in Asia, so China is the ideal location from which to establish a new business in this area.

Education

There’s a large and growing demand for English language lessons among Chinese business people and society, and this is a trend that looks set to continue. You could also offer online or small face-to-face classes in a variety of other subjects, providing you have the skills and qualifications to undertake such work.

Environment and ecology

Finding ways to reduce emissions and halt the progress of climate change is widely recognized as a global necessity. China is active in looking to reduce environmental pollution and use more renewable energy sources, but the challenges are substantial. If you have experience in engineering or construction, this could be a good fit for your new business.

Import/export

Importing and most particularly exporting are conventional business models in China that have afforded the smallest of enterprises an opportunity to create a successful company. The range of exportable products available means there’s no need to get involved in manufacturing unless you have a burning desire to make your own goods, so it’s a relatively simple process to source products and sell them via global retail outlets.

Setting up your business

First, you need to decide whether you want your entire business to be located in China, or whether you just want to base your manufacturing operations there. You should come to your decision after comparing the pros and cons of being in China as opposed to elsewhere, and the overall costs involved. You may find that although you’ll be adding transport costs, for instance, you’ll be reducing the cost of raw materials so significantly that it more than covers the extra shipping costs.

You’ll need to create a viable business plan and a budget with a long-term forecast. This forms the hub of your business proposition, and you’ll have to be able to find the investment required to finance your project. Your personal finances aren’t directly related to your business finances, but potential lenders and investors may well want to see evidence of your ability to manage money. If you have a poor credit rating, for instance, take action to improve your rating by using loans for bad credit, or judicious use of a credit card to rebuild your score.

You must be able to raise a proportion of the investment yourself, but many entrepreneurs are finding success with crowdfunding type schemes using multiple small investors to raise the money, so this may be a better option for you depending on your situation and your business idea.

Small businesses are just as important in China as anywhere else, forming the supportive framework that allows bigger corporations to operate successfully. Small companies provide opportunities for both entrepreneurs and local people, benefitting the local and national economy and further strengthening China’s position.

If you’ve only thought of China as a place for global sized companies, think again, because the country provides an ideal platform on which to develop a successful small business.