Is this the Right Time to Incorporate Your Company in China?

Company in China

China’s economic growth in 2021 is projected to hit 8.5%, a figure that is way higher than most countries, including that of the US. This is an assuring rebound following the huge disruption that was caused by the COVID-19 pandemic in 2020 and 2021. For most businesses, the impacts of COVID-19 have only come to worsen an already tough business environment. Instead of seeing your business crumble, why not incorporate it in China and grow together?

For most investors, going offshore is never a simple decision, but it needs to be made in order to become successful. In this post, we will help you answer the question, “What is the right time to incorporate a company in China?”

Profit Stagnation

The primary reason that signals most people to consider moving abroad is losses. However, profit stagnation can also be an indicator that your enterprise requires expansion to a more potential market. Profit stagnation might be a signal that the competition is growing, or there is a danger of falling into losses in the coming months or years if major changes are not adopted. 

When you expand your business to China, the large market of more than one billion people means that you can easily grow sales and profits. So, start thinking of how to take advantage of this large market, such as crafting good products to win a competitive advantage after company formation in China. 

High Overseas Demand for Your Product

If the products from your company are in high demand abroad, the logistics involved might be making it hard to optimize profits. For example, the cost of transportation, especially if you are relying on third parties, is likely to raise the cost of the products. So, why not take the products closer to your market? 

By registering a company in China, the demand for your products is likely to be high. The good thing about China is that it is an industrial hub, and most raw materials and products used by such enterprises can offer your enterprise a ready market. Even if you deal with pharmaceuticals, technology, or agricultural products, China is one big block that will never disappoint. All you need to do is research the best location for the business and use a good agency to incorporate it.

Unfavorable Policies Back Home

It is not uncommon to get governments with policies that, although passed with specific goals, such as raising revenue, are oppressive to businesses. For example, if a government passes policies to raise taxes, puts so many hurdles for businesses, or promotes monopoly, the chances are that your business will be disadvantaged. This is why you need to cast your eyes further.

business meeting

By expanding a business to China, you are sure of enjoying better government support, especially if located in free trade areas. Here, most of the requirements for businesses are subsidized to spur faster business growth. This is why most manufacturing firms going to China are located in free trade zones, and their growth has been amazing.

These are only a few indicators that it is time to go offshore to a high-potential destination such as China. Others might be the emergence of new technology or following the company’s long-term plans. 

Remember that expanding to China can be challenging because it involves dealing with multiple departments and preparing a wide range of documents. This is why you should always consider working with an agency of experts. These are professionals with deep knowledge of how the company laws in China works and will hold your hands during company formation in China and early establishment.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.