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What You Need to Know: China Visa Requirements

Chinese has become home for many Western expatriates who desire work outside their home countries. The Chinese government’s visa application process has been greatly simplified in recent years, but is still rather complicated. Anyone looking to acquire a Chinese work visa should keep in mind some crucial tidbits of information that will be crucial in deciding the status of your work permit.

There are three different kinds of work visas one can apply for:

  • M Visa: Issued to people who are not employed nor paid by a Chinese firm. Typically for brief business trips that total lest that 6 months per year
  • Z Visa: Granted to foreigners who are employed in China and spent for that 6 months out of the year in China.
  • R Visa: Issued to highly qualified individuals who meet the requirements for a class A visa, as well as their immediate family. However, it is limited to 180-days per entry.

How do you obtain a Work Visa?

The Chinese government has a point system which classifies visas by a certain criteria, which includes one’s expected earnings in China, work experience in one’s respective industry, level of proficiency in the Chinese language, and level of formal education. Applicants deemed to be low-skilled need to score a minimum of 60 points for a class B and 85 points for class A visas, whereas there is no limit on the number of class A visas issued for those considered high-skilled.

Documents You Will Need:

After deciding on which visa is best for you, you will need to provide the following documents:

  • Passport, visa or valid residence permit
  • Job qualification certificate
  • Medical report
  • Employment contract, employment certificate, or government authorization letter
  • Authenticated copy of your educational certificate (or diploma) of your highest academic degree or relevant vocational qualification certificate
  • Certificate that proves you have no criminal conviction

While making a list of the required documents might appear simple and straightforward, the information needed from those documents are more complicated. Here’s what you need to know:

Certificate of No Criminal Conviction

The Certificate of No Criminal Conviction is an essential document for applying to a work visa. This should be obtainable online and will appear differently depending on your country of origin. There are usually a government website where such a document can be requested. If you are in the USA, you should follow the procedure listed in this document or from the US Department of State. The Certificate of No Criminal Conviction will need to be notarized by a public notary or solicitor.

Educational Certificates

To prove your level of education, you will need to have the pertinent documents notarized by a public notary or solicitor. This includes diplomas (from college or high school), degrees, or even TEFL or TESOL certificates if you intend to be an English teacher.

“Legalization”

Once all the needed documents are notarized, you will then need to deliver them to your local Chinese embassy for “legalization,” along with an Application Form of Consular Legalization of the Embassy/Consulate of the People’s Republic of China. Barring rare exceptions, these documents must be submitted in person, not by mail.

How much does it Cost to get a work visa?

The costs of applying for a work visa vary by country of origin. US citizens, for instance, would need to pay USD 140 for a single entry Z visa while it would cost a UK citizen GBP 151. If collecting all the documents, making separate payments, and delivering finalized documents to a Chinese embassy is too difficult, It may be easier and cheaper to pay an agent a flat fee to take care of the whole process for you. 

Getting Started…

The above is a general outline of the process to apply for a China work visa. It is important to understand which visa you are applying for and gather the necessary documents in a timely manner to maximise your chances of a successful application. 

At Incorp China, we can assist you through the entire process, and liaise with necessary parties to collect your documents and submit your application. For more information on our services, please contact us at any time for a free quote

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Profit Repatriation: How to Get Your Money Out of China

As China’s economy continues to grow, it appears to foreign companies as an increasingly attractive place to do business. China is the only major economy to have grown during 2020, a year remembered by many for the coronavirus pandemic and concomitant economic recession. But as foreign businesses invest in the China, a growing number of them are also looking for the most efficient way to bring their profits back home. 

The rules for repatriating funds are different for individuals and companies, regarding both the preconditions one must meet and limits on the amount transferred. Here, we will can compare the regulations for companies and people:

For Companies

There are three methods by which a Wholly Foreign Owned Enterprise (WFOE) can remit its profits across borders: paying dividends, intercompany payments, or granting loans to a related foreign firm.

Repatriation with dividends

Transferring profits through dividend payments can only be done once the follow conditions have been met:

  1. You have paid the corporate income tax of 25%.
  2. The annual audit report has been completed.
  3. Accumulated losses from previous years have been recovered.
  4. All registered income has been included into the WFOE.
  5. 10% of the WFOE’s after-tax profits have been put into a mandatory surplus fund. (This is not necessary if the fund has already reached 50% of registered capital).

Intercompany payments

A WFOE can repatriate money to the parent company by including such funds in intercompany transactions. However, this method is a trade-off: because cash transfers of this nature face fewer preconditions, they may face heightened scrutiny from Chinese officials, necessitating thorough record-keeping on your part.

Loans to related foreign company

A WFOE can also extend loans to a related foreign business. A maximum of 30% of the parent company’s equity can be extended if both companies have an equity sharing relationship, have been established for at least a year, and comply with foreign exchange rules.

For Individuals

Most individuals who have a legitimate employment contract and duly pay their taxes will not find it very troublesome to repatriate their earnings back home. Methods differ slightly depending on the size of the amount being repatriated.

Small amounts

Any amount smaller than RMB 200,000 is allowed to be carried on your person as you leave China, while sums exceeding that figure have to be declared as you transit through customs. If you are leaving on short notice, keep in mind that foreign nationals have a withdraw limit of only US$500 per day.

Large amounts
Those sending larger amounts our of country must supply their bank with their employment contract, valid identification, payslips, work permit, and tax payment documents (including Tax Identification Number).

Once all necessary documents are received, the bank will make an application to China’s State Administration of Foreign Exchange (SAFE), which exercises strict control on money entering and exiting the country. Once the application is accepted, the predetermined sum of money can be transferred to a foreign account of your choice. This can be done by the bank itself or a wiring service, such as Western Union.

Choosing the right method for you

All methods of profit repatriation in China are fluid and frequently changing.  They are different from province to province, city to city, and sometimes even vary between local district within the same city. To find the best plan for you, it would be best for us to provide a complimentary consult to clearly understand your needs.

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Come aprire un conto bancario in Cina

Aprire un conto bancario in Cina è uno dei passi fondamentali per chi volesse iniziare la sua avventura commerciale nel gigante asiatico. Una delle caratteristiche più attraenti della Repubblica Popolare Cinese è la dimensione del mercato interno, il quale, per dimensioni, non ha nulla da invidiare a quello statunitense o europeo. Tuttavia, la conoscenza della lingua e della civiltà cinese possono non bastare, in quanto fare affari in Cina implica un’adeguata conoscenza del sistema economico e burocratico. Aprire un conto bancario in Cina è uno dei passaggi fondamentali, nei prossimi paragrafi sintetizzeremo tale processo ripercorrendo i principali punti dell’iter burocratico.

Perché aprire un conto corrente in Cina?

Pianificare il proprio ingresso nel mercato Cinese può essere difficoltoso a prescindere dalle dimensioni della tua azienda. Infatti poco importa che tu sia una multinazionale o una PMI, è necessario seguire un iter burocratico che si differenzia a seconda della tipologia di attività. Si comincia acquisendo una “business license”, per poi passare ai passi successivi, tra i quali appunto aprire un conto bancario in Cina. Questo è un passaggio imprescindibile, sia che tu voglia aprire un WOFE o un Ufficio di Rappresentanza (RO) dal momento che sarebbe impossibile effettuare le regolari operazioni giornaliere senza un conto bancario aperto in una banca locale.

Di cosa ho bisogno per aprire un conto bancario in Cina?

A causa dei regolamenti della People’s Bank of China (PBC), la strada potrebbe rivelarsi tortuosa. Infati, dal 2020, la PBC obbliga le banche commerciali a svolgere un’analisi dettagliata dei loro clienti esteri. Questa politica è denominata “Know your costumer” e implica non solo il monitoraggio delle attività commerciali, ivi comprese le transazioni finanziarie, ma anche un attento scrutinio delle attività bancarie con enti terzi, da intendersi come l’analisi di eventuali conti aperti ovvero “dormienti”, delle attività in capitale della società e, in aggiunta, la valutazione di operazioni “sospette” o anormali. Quindi, se si recasse un rappresentante legale della tua società in Cina e si recasse in banca per aprire il conto, gli verrebbero chieste alcune domande che potrebbero sembrare addirittura scoraggianti, in quanto mirano a verificare la natura del rapporto tra il richiedente e la società che rappresenta.
Per snellire il processo, è bene che il richiedente abbia con se pochi documenti:

  • La business license
  • Il certificato di approvazione emesso dalle autorità cinese
  • Documento d’identità del richiedente e certificato di codice dell’azienda
  • Certificato di registrazione delle imposte locali e statali

Infine, data la durata e la relativa complessità del processo, le banche cinesi suggeriscono che il rappresentante legale dell’azienda resti in Cina fin quando lo stesso non sia portato a termine; momentaneamente, a causa delle restrizioni all’ingresso, sono consentite richieste da remoto e un processo virtuale di conoscimento del cliente e accertamento delle credenziali. Inoltre, anche grazie al supporto delle ambasciate e dei consolati, si sta cercando di creare soluzioni alternative che possano garantire il ricevimento della documentazione necessaria all’apertura di un conto corrente.

Per maggiori informazioni, potete:

[email protected]

WeChat: What is it and Why is it so Popular in China?

WeChat. It allows Chinese people to make payments, install other apps, and even write micro-blogs. Despite its popularity in the Chinese mainland, it is not often used in other countries for privacy issues. However, let’s get started with the fundamental question:

What is WeChat?

WeChat (微信) is a Chinese multi-purpose app developed by Tencent. First released in 2011, it has become the most popular app in China due to its numerous functions, despite it initially only sending instant messages. Why did WeChat grow so rapidly in popularity? The answer is simple: as an all-inclusive app which has no competition in mainland China, WeChat is the dream of every developer. WeChat’s ubiquity in Chinese society makes it a necessity for anyone even visiting for a short time, so make sure to download the app once you’re in China, otherwise you might not even be able to pay a taxi driver.

WeChat data statistics and insights - most popular app in China - 2019

Figure 1 Share of mobile users using the leading social media platforms in China as of October 2019

The poll above shows that in 2019, 73.7% of Chinese netizens frequently used WeChat, a percentage that can only have since increased, especially since the outbreak of the coronavirus pandemic has make virtual transactions so necessary. Furthermore, in addition to being sponsored by the Chinese government, China’s youth tend to use WeChat to buy music online. Some may think that there is no need for WeChat because other apps could take its place.
But remember to keep in mind the “Great Firewall”, that blocks Facebook, Google, Twitter and WhatsApp. As the versatility of WeChat grew, the need for other social media apps dropped. Instead of a messaging app like WhatsApp, the Chinese netizens have opted for WeChat; instead of Google Pay, they have opted for WeChat pay, and so on. That’s why and how the app developed by Tencent has become an all-inclusive dominant super-app for the Chinese users.

How safe is WeChat?

Unfortunately, this question has no easy answer. According to Tencent, the company does not track or store users’ data, as long as the Chinese authorities do not solicit such information.  For foreign and Chinese users, the situation might be different: “Overseas Users” are not obliged to follow the strict regulations applied to Chinese users. For example, a Chinese user can not receive a message containing sensitive words such as “Free Tibet”; in other words, the app monitors the messages and censors some keywords which might be perceived as threatening by the political regime. Therefore, foreigners can talk to each other about sensitive topics, such as the 1989 Tiananmen Square massacre, but the same messages can not be received by Chinese netizens.

How Safe is a WeChat account?

In order to get a WeChat account, one only has to register and join the app with a username and a password, thus your account is safe as long as you choose an effective password and you frequently change it. The management of data is a little bit more troublesome: all conversation history is stored locally on your device, which implies that if you change your phone you will have to manually transfer the data to your new device. But why is this troublesome? WeChat doesn’t provide users with end-to-end encryption but with transport encryption. The end-to-end encryption is widely used by western messaging apps and it allows only the sender and the receiver to see the message; whereas the messages sent with transport encryption might be read by third parties. Even though Tencent claimed that all messages, once delivered, are deleted on the server, they still are on your mobile. According to Chinese law, apps, blogs and online forums are accountable for the content of their website which includes what users have written, so were the government to ask, WeChat would hand them your data.

Is WeChat Pay safe?

Users’ credit or debit card  information is stored in a secure server. However, WeChat Pay works only in mainland China and few other countries. WeChat pay is the most popular payment method in China and it requires you to link a source of credit or (just for users with a Chinese bank account) debit card. You can send red envelope (hongbao), transfer money and pay for your groceries with WeChat Pay—no surprise that the app has come to be the emblem of China’s cashless society.

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How To Open a Bank Account in China

Planning to operate a wholly foreign-owned enterprise business in China, whether it be a small business, a global company, or even a Fortune 500 company, can be fairly effortful. It is essential to take all the precautions needed to for your business to be successfully established. Once you acquire a business license, there are more steps to be taken further, such as, opening a bank account in China, to assist your business affairs. Although this step is necessary and can sound simple, opening an account in China can be challenging, especially recently, as the regulations became more stringent.

As of April 2020, the People’s Bank of China (PBOC) have made it obligatory to follow high level of analysis during the Know Your Customer (KYC) process. Because of this, the PBOC have ordered that all banks not only to oversee business activities, including financial transactions, but also to induct a few other conditions such as investigating your other bank accounts in addition to dormant accounts, seek capital transitions, examine times of transactions as well as suspicious or abnormal activities, restrict pay outs and limit online banking transactions.

In order to open a bank account in China, one must acquire a few essential documents including:

  • Ownership certificate (lease contract or site certificate) 
  • Proof of utility or rent transfer voucher for the past month (must resonate with lease contract)
  • Original copy of company business license (official seal, financial seal, private seal of legal person) 
  • Original copy of ID card and company associated documents of the legal person

As the process of opening a bank in China can be lengthy and challenging, China banks advise that a legal representative is present in China through the process. Due to the travel bans, banks in China have made an exception in video applications, if all is well the bank will then approve of the proposed bank account. Aside from all of these processes, the person representing the company applying for the account will have to visit the bank with additional documents. The bank will then call and confirm the opening of the account. 

Additionally, various Chinese commercial banks are trying their best to aid new clients with alternate solutions such as organizing a virtual interview (with notarized documents from the Chinese Consulate or Embassy) to make the process more manageable. 

The challenges involved in setting up a WOFE can be interminable and demanding, feel free to reach out to us for a consultation!

+1 561 729 6508 | [email protected]

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China’s Digital Market: How it Combats the Economic Consequences of the Corona Virus

Even before the surge of Corona Virus cases and the world going into lock down, the digital market in China has been on the rise, and more dynamically than most nations around the world. Such systematic progression is rooted in the country’s core business model as well as the business environment created by China’s rapid growth. Using their business environment as an example, we can more readily anticipate business trends and opportunities that will arise in this age of digital business.

From the beginning of the outbreak to the present, China has been unknowingly prepared for the change from physical work environments to the shift into a predominantly remote working business model. The growth of technology-based companies such as Tencent, Alibaba, and Huawei, as well as the integration of apps such as WeChat and Weibo into their daily life has put the Chinese economy ahead of the curve in the shift towards a digital business framework. The convenience afforded by the systems in place allow more remote services to be provided to the everyday consumer. This addresses the issue of public quarantine that’s present in most countries in the world.

In most regions of the world, retail and physical services providers have suffered economic losses. Countries are seeing record loss in sales and activity. These detrimental short-term effects could ripple out into long lasting issues if proper action is not taken. We can look at how the majority of the china market operates to see how business as a whole can come out of this pandemic stronger and more resilient than ever.

Looking at China’s business models we see that compared to the rest of the world, they rely mostly on remote access work sites as well as a more digital work environment. This is not only seen in service provider industries but also providers of physical goods. In many places in China  customers can have services brought right to your door with a simple press of a button. Following this, restaurant models even allow for customers to enter public establishments and sit alone, order from their mobile devices, and have food brought out to them automatically, without human interaction. These business models allow for the everyday person to go about daily routines without jeopardizing the safety of others. This example aside, China shows how their digital economy can be a success and comeback story for the rest of the world.

To fully grasp the effects of China’s digital market, this following diagram provided by McKinsey&Company.

Analysing the graph, it becomes apparent that China has capitalized heavily on the digital market since the popularization of smartphones globally. They have a vast share of their economic activity coming from mobile transactions as opposed to other forms of transactions. Finally, it is quite visible that they are gaining on the US economy in terms of start-up activity, and these estimates are guaranteed to have grown over the past few years.

The key takeaway here is that the rest of the world has much to learn about integrating technology and shifting their business into a more digital format. Another way to take advantage of China’s digital market and to come out on top after this pandemic is to capitalize on the network. China’s digital market runs on its own servers, and plays by its own set of rules.

China has something colloquially known as “The Great Firewall of China” which in essence allows for government controlled access of the internet available in China. As such, companies like Google have limited to no access, not allowing their indexes to be accessed by those living in china. To set up an online presence in China and be indexed by companies such as Baidu requires what is known as an Internet Content Provider License, or an ICP license. These licenses have become in such high demand as more and more companies attempt to break into the highly profitable Chinese market. Incorp China, has specialized experience in engaging with Alibaba, Tencent and other digital service providers involved in the Chinese digital market. This experience will help streamline the acquisition of ICP licenses. If you have any inquiries, feel free to contact us more about the subject.

Let us help you break through The Great Firewall of China and get inside their digital market.

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China Rebounds Following Two Month Fight with Coronavirus, incorpchina, incorp china

China Rebounds After Two Month Fight Against Coronavirus

Just recently on March 19th Wuhan reported the first day of receiving no new cases. While there are still strict measures in place to prevent further spread of the Covid-19, the Coronavirus, the country has already begun shifting back into the regular flow of business. Companies are opening up, people are going to work, and life is beginning to go back to normal.

With this upturn and people going back to work, we’ve opened our offices again and have started consulting our clients in handling the economic strain caused by the Coronavirus in China. Getting back into the usual way of business after the outbreak has had its ups and downs. Especially for our company, consulting our clients on how to best deal with it has been quite a challenge but we’ve enjoyed it none the less. We’ve had a meeting already with the tax bureau and many reopening businesses.

This trend is echoed throughout the country, and after a two-month-long battle against the virus, the economy is beginning to turn back up and rise again.  Of course, the Chinese government hasn’t said the virus is beaten, for that, they’re waiting until at least two weeks have passed with no new reported cases, but overall, this is good news for businesses, the economy, and those looking to start work in China.

The cities with the highest turnaround are the coastal cities and those farther away from Wuhan, cities such as Shenzhen and Guangzhou. The measures taken by the Chinese government really demonstrate how efficiently the Chinese government has handled the outbreak. The measures are taken, temporarily sacrificing economic growth to combat the outbreak, which is another tough choice soon to be faced by the United States and other countries newly coming into contact with the virus. The following weeks will be vital in combating the virus.

If you need help with getting started again in china don’t hesitate to call us!

robert fisch at the asia business conference

Asia Business Conference Speaking Opportunity

Recently, I was fortunate enough to be invited by The University of Michigan to join their discussion panel for their Asia Business Conference event. It was truly a wonderful experience being able to speak about the power of e-commerce and mobile technology in China.

I would like to thank everyone at the conference as well as fellow speakers Peter Sim, Lee Boyd, and Mon-Han (Hans) Chung, CFA for making the event as memorable and inspirational as it was. I also would like to extend my gratitude to Tiffany Chen, Alex Guo, and Yechunhe (Sylvia) Zhou for hosting the conference. It was wonderful to hear other professionals discuss their experiences in China’s ever-growing market.

I’m happy that I was able to take my experience in consultancy and economics running Incorp China and apply that directly to China’s ever-changing markets. Being able to share my experiences with future business professionals and witnessing them learn and grow is something that is inspiring to watch. I hope everyone at the conference walked away as motivated and with as much new knowledge gained as I did, and wish you all the best in your future careers.

robert fisch at the asia business conference
Guan xi, guanxi, business in china

Setting up a WOFE in China

Starting a business in China is an incredibly fascinating venture, with a bulging and aging population and greater demand for a better quality of life, there are new markets emerging in China across all sectors.

A WFOE is a Wholly Foreign Owned Enterprise. This is a limited liability company which is owned entirely by a foreign company or individual. There are many advantages of owning a Chinese WOFE, including:

  • Absolute control over business decisions
  • Ability to hire and fire staff
  • Can invoice Chinese clients in RMB
  • Ability to convert profits from RMB to US dollars for remittance to parent company overseas
  • Protection over intellectual property
  • Full control of human resources
  • Independence
  • You retain all profits

Depending on the type of WFOE you register it allows the company to do Trading, Wholesale, Retail, import/export or Franchise in China

When applying for a WFOE, you are actually applying for approval, not registration. This is because the local governments operate on an approval-based system, meaning they can reject your application with no further explanation or contact. This is why it is important to have all the correct documents and prepare.

The main things you need to consider and prepare for your WFOE application are as follows:

Name

You must provide us with several alternate company names both in English and Chinese. We will then prepare and submit the application documents to the Municipal Government Administration Bureau of Industry and Commerce. There are some restrictions on your company name, and we will liaise with you to create a compliant and compelling name.

Project Feasibility Report

An important aspect of your WFOE application is your project feasibility report, which includes your business scope, business development plan and details of your registered capital.  You must ensure all business activity remains within this approved business scope. Business Scope includes, but is not restricted to: WFOE’s activities, products/services provided, 5-year plan, staffing, balance sheets, job descriptions etc. It is important to operate within your business scope and the sanctions for those caught doing business outside of their scope are heavy. If the dynamic of your business changes, and so to your business scope, you must reapply for a WFOE. 

When setting up a WOFE, you must specify what type of company you would like it to be, and this must be consistent with your business scope. Three main categories are Manufacturing, Trading and Consultancy. Although the Chinese government allows for a little leniency regarding your business type, if you were to drastically change the dynamic of your company and the goods/services you provide, you would require further application and approval.

Articles of Association

A minimum of one shareholder is required, this may be an individual or a company, and the relevant documents authenticated. If they are an individual investor, then their original passport will need to be checked by Chinese government offices and authenticated. If it is a company applying, then its official businesses licenses and Article of Association must be authenticated by a Chinese consulate. Once you provide us with your ownership structure, we can request the relevant documents and send them for authentication.

The timescale for setting up a WFOE can be varied. Here at IncorpChina, we have registered a sole investor WFOE for a client in the pharmaceuticals industry in just one day! Typically, however, it can take up to 40 days. At IncorpChina, we have close relationships with government officials and a comprehensive network of experts who are experienced in applying for WFOE’s. This significantly reduces the time taken to register your business.

Registered Capital

As of 1st March 2014, according to new PRC business registration regulations, there are no regulations on how much an investor should invest in capital, or when they should inject it into the company. This is an encouraging policy; it has been introduced to encourage foreign investment into mainland China. This gives investors greater flexibility on their investment and saves them investing large sums of money early on to remain compliant. Obviously, capital should be registered, and the actual figure will depend entirely on the host companies plan and vision.

The registered capital can be paid in full all at once (or within 6 months after the date of issuance of the company’s business license) or paid in several instalments within 30 years of its operational span. Each instalment of registered capital requires a capital verification report, which includes bank confirmation of capital receipt and a CPA’s formal Capital Verification Report. This costs 4000RMB per instalment. For this reason, we advise to pay the capital in one or two instalments to minimize handling charges.

Lease Confirmation

It is a legal requirement for any WFOE to have a formal business address where correspondence from the Chinese government can be sent and business can be conducted. The lease conformation contract is a mandatory document required in the application of your business license. At IncorpChina, we assist with clients looking for offices to lease.

3 in 1 Business License

Once the approval certificate is received, an application for business license can be submitted for FICE to the Administration Bureau of Industry and Commerce. This 3 in 1 business license combines license, organization code and tax certificate.

Carving Chops

A company chop is the Chinese equivalent of a signature, only it has greater authority and validates contracts and documents. It is a legal requirement for a Chinese company to own its own company, finance and personal chops, and you can collect these from a local police station.

In addition to the required documents and items stated above, companies are required to undergo further registration and apply for further certificates. This process can get very bureaucratic and lengthy. However, at IncorpChina, we have an experienced team of specialists who have applied for over 50 WFOE’s, with a 100% success rate. We have frequent contact with government officials so we can get your Chinese entity registered quickly and effectively.

Want advice regarding your expansion into the Chinese markets? Send us a message through the livechat feature on the right of our page, or alternatively, call us on our landline!

Guan Xi, the key to business success in China

While the Chinese business market is constantly modernizing, adapting, and growing; there is still a concept of immense cultural importance that has governed Chinese business practices for many years. The notion of 关系 (Guan Xi) is essential for any company to understand if they intend on doing business in China.

At its core, guan xi is about building relationships. Trust is crucial to business success in China, and it is something that does not come quickly. While it may seem counterintuitive in the current fast-paced business environment of the United States, a great deal of relationship building in China exists outside of conference calls and boardroom meetings. In China, face to face interaction helps build a kind of trust that simply cannot be acquired through only communicating through a phone speaker halfway across the world. Because of the integral part that guanxi plays in Chinese business; it is essential for an American company hoping to do business in China to make sure that they have a strong understanding of Chinese culture in order to build a strong relationship with Chinese businesses.

The impact of guan xi cannot be understated. Building guanxi with a Chinese company is tantamount to forming a sort of friendship with them. Like any friendship, Chinese companies that have guanxi with American companies will be more inclined to have more confidence in business interactions as well as be more willing to pursue further business with that company. Once guanxi has been established, a Chinese company will be more willing to pursue further business ties with a company who has earned their trust and respect.

A good example of guanxi in action is when one of Incorpchina’s clients needed urgent help to apply for general taxpayer status. Robert Fisch, Incorpchina’s CEO, went to the tax bureau and found the bureau chief. Rather than immediately getting down to brass tacks, Robert drank tea with the bureau chief all morning. After getting to know each other’s backgrounds, guanxi had been established. The bureau chief was willing to connect Robert with the department heads and continue building connections with Incorpchina. This demonstrates how once guanxi is established, it will likely lead to deeper relationships.

Incorpchina’s client urgently needed taxpayer status. Normally, one would have to present themselves in person at the tax bureau in order to complete their application. Even after appearing in person, the client might still have to wait for upwards of a month for their application to be approved. Due to the relationship that had been established between Robert and the officials at the tax bureau, the office allowed the contract to be processed in two days, allowing the client to win business in China.

Ultimately, a strong understanding of guanxi can not only expedite business in China but also serve as a tool to expand and strengthen a company’s enterprise within the Chinese market. In China, trust and relationship building are truly the keys to prosperity; once one has established a close relationship in China, success will surely follow.

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