Why Starting Business in China is not Easy?

In recent years, China has put lots of effort into encouraging entrepreneurship and has introduced many relevant policies on entrepreneurship, such as tax relief, capital subsidies, and so on, which have contributed to created a favorable entrepreneurial environment in China. Many of these policies are also applicable to a large number of foreign startups at the same time. However, with the rapid development of local enterprises, the development of foreign startup companies is not as fast as the local ones in China. Even we can hear voices saying that it is very difficult for foreign startups to start business in China. Is that true? For foreign entrepreneurs, what problems have hindered them from starting a business in China? Here are some of the concerns when foreign startups starting business in China:

Complex and Unclear Laws and Regulations

Foreign startups often struggle with laws and regulations in China, with 32% respondents in a recent business survey listing confusion about the regulations as their number one concern when starting business in the county. Most common complaints revolve around obtaining the required licenses and permits, with many respondents bemoaning the laborious processes. 

Intellectual Property

Many people may have known that intellectual property rights in China has been a big question for a long time. Especially for tech startups, they must consider how to protect their technology beforehand. Thus they have to check check whether their technology is duly protected by patent, and register it before starting business in China as the first person who registers the trademark would be the owner. Although recent reports suggest this is an area that is improving the most, compared to western countries China still has a long way to go.

Competition

We all know that China has huge opportunities for business, but competition is also the same. Almost every niche market will have similar products or services, so foreign startups must stand out using their unique advantages, for example innovation or technology. But now many Chinese companies are also seeking to improve the quality of their products and services so they can sell them abroad, which has increased competition as a result. Additionally, the government, in some cases, can also give preference to domestic firms, which makes disrupting the market rather difficult.

Relationship

One Chinese word you will hear constantly about doing business in China is guanxi. a Chinese company will feel far more comfortable doing business with a company which they have strong guanxi because they believe it will make it far easier for them to trust their business counterpart. But it’s not easy to develop, especially for a foreign startup. Without a local Chinese staff or representative, it’s hard to develop and maintain guanxi with local companies and government agencies.

WTOIP Global

WTOIP is the world’s leading entrepreneurial resource-sharing platform with a focus on IP, helping foreign tech startups to start business in China.If you want to expand the China market, just contact us.