Starting a small Business in China

[Souligna]

Ni hao!

I am wondering if it's easy to start a small business in China?

Something like a small Western restaurant, internet café, 1$ Dollarama, computer store or else. A factory will be interesting too, but need more investments to buy operating machines.

Can I easily buy an established restaurant instead of starting a brand new from scratch?

What can I do with 10 000$ us (its about 60 000 RMB I think)?

I guess it's a Z visa i have to get to work and to stay for a long period?

I never been to China, but wish to go there in 1 year and to establish there for a while or forever. I am working hard on my Chinese and study a lot about the culture, politics, ideas. Your forum is a Gold Mine of informations for me =P

I am a Canadian from Montreal. I can speak English, French and i am working hard on my Chinese these days. I am a Mechanical and an Architectural draftperson. I used to make plans for engineer and Architect on computer with Autocad or 3D software.

Xié xie!

[BrandeX]

What can I do with 10 000$ us (its about 60 000 RMB I think)?

You need 500,00 rmb for a foreign owned enterprise generally (legal req. for business registration). Along with related permits, licenses, permissions, and/or guanxi.

This is usually not a small affair. You may be able to establish a business with a Chinese partner who will have majority ownership of the business. That may be a more viable option.

[Souligna]

Hello BrandeX, Thx for your advice!

Well I have read the book "Doing business in China for Dummies" recently. It was very instructive, however I need more accurate answer from real people living in China. What can I do with 10000$US (60000 RMB)? Is it possible or I might need more like 20K US?

Unfortunately, I don't have 500000 RMB. This is the case when you project to get the profits OUT off China and its reserved mostly for big Company like IBM, Yahoo, etc.

I have thought about joint Venture also, but there is still downside about not controling your company like you wish to be.

---------------------------

However, they say it is possible, if your intention is to keep your business and Profits inside China. The fees will be lower.

I am not a Chinese cityzen, I guess I have to marry a Chinese girl to be accepted. This is what I look forward too.

[imron]

You need 500,00 rmb for a foreign owned enterprise generally

I'm fairly sure the minimum amount for a wholly-owned foreign enterprise is RMB 100,000. It does depend however on the type of business you want to start and on the location.

[kdavid]

I'm fairly sure the minimum amount for a wholly-owned foreign enterprise is RMB 100,000.

That's what it costs up here. But this is just to have a piece of paper saying you're a legal business. It doesn't include the start-up, greasing pockets, etc.

I need more accurate answer from real people living in China. What can I do with 10000$US (60000 RMB)? Is it possible or I might need more like 20K US?

To be very frank, you can't do anything with US$10k in China.

You should treat having Guanxi as absolutely essential to doing business here. If you don't have a trusted Chinese business partner, you are going to find it very, very difficult to get off the ground.

20k will get your business license, but not much else.

[anonymoose]

greasing pockets

Be aware also that "greasing pockets" is illegal in China. I'm sure most business do it, but as soon as you get on the wrong side of the authorities, they will then do you for it. In some cases, people have received the death sentence.

[lilili811]

10K,is to less money, but if you have and souce of bussiness, I can invest for you.

[Farkas]

First,I just want to tell you that it’s not easy to start a small business in China,something like you talk about may emerge long ago,maybe you can find some new things

Second,$10k is not a large sum of money,you may find that the rent is increasing rapidly,but don’t lose heart,you may try to other ways to complete your goals,such as teacher,not only start your own roads but also can enhance your Chinese,

Third,I think all advices above are helpful,I work in machine industry and finding my own road

[imron]

But this is just to have a piece of paper saying you're a legal business. It doesn't include the start-up, greasing pockets, etc.

But, it's a legal business with 100,000 RMB in capital. That capital can then be used for start-up and other costs.

[Lu]

Consider starting out a little less ambitious. Go to China first, to see for yourself what the country is like, whether you really like it, and want to live there. Perhaps you'll even meet the Chinese girl you're looking forward to marry, who knows, or a possible business partner. You can also get an idea of what kind of business would be a good idea, and what it takes to open one. This knowledge will make it easier to figure out the next step.

[AxelManbow]

What's essential is a business plan you can convince authorities can work. The absolute minimum initial registered capital for a foreign business is in the order of 60k (depending on industry and jurisdiction), absolute minimum. 100k is considered low for companies which are essentially one-man-bands.

Registered capital can be used by the business though, it is not a tax. It can be used by your business to pay rent, expenses and wages as three pretty important examples. In the assessment by the authorities on the viability of your business the registered capital of the business must be seen as sufficient to see the company through it's initial investment and loss-making period into profitability (should the plan work out). And if you're going to spend 60k Yuan over the space of even a few months until profitability and rent an office and staff, well that's not going to go very far.

Involved in determining the amount of registered capital is China's attitude to employee responsibility. It is much closer to the Northern European model than the Anglo Saxon model/no model. An employer has a long term obligation to an employee and cannot hire/fire aggressively.

Greasing pockets: That is indeed illegal in China. And any business that is associated with greasing pockets is probably several orders of magnitude above 60k Yuan registered capital.

Larger companies: They have registered and invested capital of 100s of millions to billions. 500k Yuan remains small fry.

Dummies Guide to Investing in China is likely better than no guide. It is always good to do some research. I would suggest a knowledgeable legal/accountancy person could help a lot, preferably someone local.

Joint Venture: Based on this post you will be eaten alive along with your capital.

PM me if you have specific queries you'd not like public.

[Souligna]

Thank you everyone for your advice!

It won't be easy like you said to start a new business, I might need help from a firm eventually.

Anyway, ill think about it when I will get there next year. I might find good friends and start something together.

I'll try to save up 20k US to make something more viable.

Some infos i have found :

http://www.doingbusiness.org/Exploretopics/startingbusiness/Details.aspx?economyid=42#1

http://www.chinasuccessstories.com/2008/01/09/starting-business-china/

On those sites they say you'll need only 30000 RMB min. (5k US) in capital since 2006. So it looks good for me

[rezaf]

Even 20000 is a very small amount of money for doing anything in China because excluding the rural area China is not a cheap country, however if you have the right connections and friends here you might be able to start something like a small trading business here.

[imron]

On those sites they say you'll need only 30000 RMB min. (5k US) in capital since 2006.

That is for Chinese-owned businesses with more than one shareholder. For Chinese-owned companies with only one shareholder the minimum is 100,000 RMB. I'm fairly sure the minimum for foreign owned enterprises is 100,000 RMB as well, although as AxelManbrow mentioned, it can differ based on the type of business you want to establish and the location.

[simonlaing]

I think imron is probably right about the 100 K yuan mark.

Some westerners use a work around by putting the business in their spouse's name or having both the chinese person's name and your name on the business license. For school's the minimum amount to start a school or training center was and I think still is 500,000 Yuan, though you can take a loan out against this bank deposit of up to 200,000 yuan I think.

I had a friend who started a tiny bar in Nanjing, 60 square meters in a basement under his wife's name for about 10 ,000 yearly rent and about 5,000 in interior decoration. He and his wife spent most nights staying up drinking heavily with the big customers (because they always want to drink with the boss). Even with this sacrifice of his liver and sleep both them were only making about 5,000 yuan net profit a month. About half his previous teacher's salary. They left the contract 6 months into it and went to Thailand last I heard. I have heard of westerners with their wives starting bar/restaurant/guest houses in tourist places like Yangshuo and Lijiang who have made money because of the constant stream of tourists but most people who open bars barely break even as Chinese professionals mostly only go out on the weekend.

So things can be done with less capital but they rarely make much money.

Good luck,

Simon:)

That is for Chinese-owned businesses with more than one shareholder. For Chinese-owned companies with only one shareholder the minimum is 100,000 RMB. I'm fairly sure the minimum for foreign owned enterprises is 100,000 RMB as well, although as AxelManbrow mentioned, it can differ based on the type of business you want to establish and the location.

[Jonnynue]

Yeah stared down this road too. A guy that worked for a company that had offices in the US, JAPAN, China said the legal fees will be around $2000-$3000 to get someone to do the work for you. This will help keep cost down. The legal requirement for local firms of any type if registered capital of 30,000 yuan. For foreign partnership of of a Wholly owned foreign entity it was 30,000 yuan per investor. For a single owner the minimum was 100,000 yuan for non-manufacturing and non-retail. It goes up from there. Keep in mind this is the minimal amount. It is up to the district you want to start it in to determine how much they think you need. My friend stated most places will want to see you have enough money to pay rent and basic legal fees for 1-3 years. So if rents are high where you looking they could reasonably ask for you to register more money.

He did said many "consultants" will say you can get started with $5k but they are lying to you. $5k get them their fees plus $2k to start greasing the wheels. Many people thing registered capital means $$ in the bank but it can mean anything. One example given was that the lawyer gave the city a contract saying the company had already leased a office and already paid a large sum (like 75,000 yuan) for it. So they did this plus other tricks to make up the register capital. Similar to how in the states people were getting mortgages even though they didn't have the income to pay them. These individuals are only concerned that they get their money upfront. He also noted that they will often promise that you will put up 20% and then the rest of the money later. I suppose the point being they will get the job done, but it could come back to bite you in the but.

As far as getting it done without help, it can be done. One guy took about 2-3 months going back and forth to get it worked out. His Chinese was pretty fluent though. Said the overall process wasn't any more difficult than going to all the required places you need to it in the US, City approval, county approval,state approve etc.

[salman24]

please tell me how to start import export firm in china? I have seen such types of companies in yiwu city who are making profits thorough commissions. they just help in import and export of goods and charge commissions on this. I don't know the procedure to start this in china. Please give me some guidance that how much money I need and what are other process of registration.

Thanks

Muhammad Salman.