There is a common question most businesses ponder upon when looking at China: Are there at present any opportunities to invest? The answer often leads to several further questions which are generally regarding the extent of business opportunities present for foreign businesses. What is a WFOE? Is it easy to register your company in China? How does one go about understanding the market? What costs are generally incurred when setting up a business in China? What marketing strategy would work best for foreign businesses looking to enter the local market?
Before these questions are answered, every foreign business must be familiar with key facts regarding the country that should be generally known.
China – A Brief Overview
Deriving its name from the word ‘Center’, it was believed in the ancient times that China was the center of the Earth. China having a population of over 1.3 billion people making it a very large market for businesses to operate in. This figure is expected to grow drastically by the year 2020.
With a population of over 11,716,620 people, its capital Beijing has been historically regarded as the administrative and political heart of the country for centuries. Other countries also house their consulates and embassies in Beijing for this purpose.
China uses the Yuan Renminbi (RMB) as its national currency, along with accepting the US dollar for trade purposes and to make international transactions. It has even been made possible to open a China-based bank account through the internet.
China – Financial Center
Shanghai is globally recognized as being China’s finance center with its biggest stock exchange being located in the city. Historically, Shanghai has influenced the major trade and economic policies of China due to it being a major financial hub.
China – International Trade Center
Hong Kong currently acts as China’s trade center due to its historical significance. Hong Kong remained under the ruling of United Kingdom for 100 years as by an agreement with China when Opium Wars was ended. On July 1, 1997 Hong Kong possession was given back to China. In the very same agreement, China agreed that for next 50 year the policies and law that holds in the UK will be implemented in Hong Kong and will last until 2047. Due to it being under colonial rule, it historically acted as the center of trade with China and other neighboring countries.
China has also used the political and administrative structure of the UK to learn its system and improve upon its own. This is also one key factor in China achieving such massive growth in such a short period of time.
Top Populated Cities of China
The following cities listed in order describe opportunities to be availed for foreign businesses in China:
The cities listed above are based off of several factors including population, such as Beijing being number 1 on the list housing the largest population and Changchun housing the smallest among them.
Top 10 Cities with the Best Opportunity for Entry into the China Market
Being the biggest city in the country, Shanghai acts as China’s major hub for economic, trade, science and technology, along with also being a major exhibition center. In addition, Shanghai also has the largest GDP of any Chinese city along with being a main center for trade with the rest of world. China is also planning to increase the cities position as a financial and trade hub with a target to be the world’s largest hub by the year 2020.
Acting as China capital, Beijing holds its significance as being the center of political and administrative decisions being made that not only influence the country but also the rest of the world. It also holds historical and cultural significance for the country.
Known as a world famous trade port, Guangzhou has major stake in the country’s financial, transport, economic and trade market. It has historically also remained a major center for making administrative policies.
Guangzhou also holds one of the largest import and export exhibitions in the world providing a major opportunity for foreign businesses to meet with local businesses and especially factory owners to participate in opportunities to have their products manufactured in China. Businesses can also meet with new local businesses who wish to trade with foreign businesses. Thus, the city of Guangzhou provides a major opportunity for foreign businesses wishing to enter the local market with exciting opportunities for trade.
Shenzhen was planned to be China’s first economic zone with a plan to make it an international trade port as well act as a center for foreign businesses to invest in the country. Today, it is one of China’s first-tier cities acting as a major hub for trade and finance with the rest of the world. It also acts as a major technological center for the country.
As Shenzhen was the first city transcribed by China to help the country’s economy grow from its plan of economic zones, it also acts as a symbol for growth and reform in China. Foreign businesses should take note of Shenzhen when planning to invest in the country.
Being the first port that was opened for foreign trade in the country, Tinajin is also a major center for international trade and provides opportunities for foreign businesses to enter the local market. Today, foreign businesses have set up their offices in Tianjin for trade purposes with China.
Chongqing is one of China’s oldest industrial hubs with a port city that provides businesses with the opportunity to interact with the rest of the world. Located in the southwest of the country along the Yangtze River, with major cultural influences from the Yangtze culture.
Suzhou is located at a distance of 100 km from Shanghai, and it is one of the country’s largest manufacturing sectors holding large shares in the iron market, IT and technology market, the steel market along with manufacturing textile products. It also generates its revenue from tourism and provides foreign businesses major opportunities for investment.
One of China’s most competitive cities in the domestic market, Wuhan is a major center for trade and technology. It even rivals the first-tier cities in China’s retail sector. The cities place in the economic market provides a great opportunity for both large and small businesses looking to do business with the rest of the world. Foreign entrants looking to set up a business in the country as a Wholly Foreign-Owned Enterprise should look to Wuhan for business opportunities.
China government has regarded Chengdu as a prime market for foreign businesses to invest in logistics, commerce, transportation and science. Also a major hub in the manufacturing and agriculture center, foreign entrants should consider Chengdu as a major hub trade.
An important city in trade, commerce, science and finance, Hangzhou acts as a major capital for foreign business opportunities, also acting as a major metropolitan city. Hangzhou also holds the country’s film industry holding annual exhibitions related to film.
Special Economic Zones
Special Economic Zones (SEZ) are the special areas created by China to provide the country economic growth by inviting businesses to interact with one another by the attraction of special policies such as free land, tax exemptions and other such policies. Also planned to attract foreign businesses, special economic zone plans originally consisted of Shenzhen as its first city. Today, it includes many other cities and is a key reason why China has achieved the massive economic growth. It was designed to attract businesses and factories in Hong Kong with incentives to shift their business to these areas.