The world’s second largest economy is a magnet for foreign investment. It’s also a market that requires informed and careful navigation. Most foreign companies seek the support of outside experts to fully understand both the regulatory landscape and cultural nuances that are so important to business success in China.
At a Glance
Good to Know
With a population of 1.4 billion people, China is the world’s second largest economy, the world’s largest industrial country and the world’s largest agricultural country. The Chinese economy has been growing at an annual rate of around 8-10% in the past two decades except during the COVID-19 period.
Foreign direct investment will remain high in 2023, especially in wealth management, new energy, and high-tech industries. The Chinese economy fundamentals continue to be sound and the country enjoys comprehensive competitive advantages in terms of market size, industrial support, infrastructure, and business environment.
With over 15 million university graduates each year, China has a large workpool of skilled talent that foreign enterprises can tap into to strengthen their management and operation teams. In addition, government policy supports and expands market access. The Central Economic Work Conference recently stressed even greater efforts will be made to attract foreign investment.
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Language and cultural differences are among the top challenges of doing business in China. Without being able to properly communicate with Chinese people and understand how they think, it is very difficult to operate a successful business in China.
Diverse Business Practices
The size of China and its more than 30 provinces bring a wide range of business practices that can be challenging to newcomers, yet are crucial to grasp to see success. Even in top-tier cities like Beijing and Shanghai, the business culture can be very different.
China has its own legal, tax, and accounting systems that require the support of professional consultants. In recent years, regulations in regard to company- and tax laws, in particular, have been repeatedly revised. Infringement may result in severe penalties. This can bring challenges to corporate compliance management.
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