Category Archive business culture

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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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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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, 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.

Be Prepared: Five Important First Steps for Setting up your Business in China

Compared to the fast-paced explicit processes which dominate Western business, starting a company in China can be a headache.  Combine extensive legal work with a social system opposite of your own and even the most experienced businessmen and women are in for a challenge. 

However, establishing a presence in China continues to be a profitable move for entities in every business sector. With endless resources at your disposal, how to begin gets confusing.  We’ve stripped away all the particulars and provided you with a basic idea.

The following list highlights five steps that your business needs to properly complete before beginning operations in China.

Think about how your business will fit into each section and most importantly, think of the relationships you can and will establish along the way. To succeed, you need sturdy connections to lean on during every step. Finally, be patient. Remember everything takes time in Chinese business culture.

 

1. Research, research, research

Begin by investigating the industry and areas you are interested in. Government officials publish a five-year plan stating the specific kinds of businesses they are looking for. Make sure to use it.

When you have an idea of the best place for your business, take a trip. Don’t stay in one place; compare other regions. Start making observations. Attend trade shows. Network.

2. Decide which entity is best for you

There are three kinds of business entities you can register for. Consider your particular business scope and decide which entity will supply you with the most opportunity and least amount of risk. The three potential business entities are:

i. Representative Office (RO)
– significantly limits what your company can do
– easiest to open

ii. Joint Venture (JV)
– your Chinese partner will have a home field advantage
– JVs create greater risk should the partnership fail
– only entity in which a “restricted” business can operate
– less limitation

iii. Wholly Owned Foreign Enterprise (WOFE)
– allows foreign entrepreneurs to own 100% of the company
– requires an extensive set-up process with registered capital
– can operate as trading and retail companies

3. Develop a five-year business plan

Be precise but be broad. Once your business plan has been finalized, you are only able to operate within its guidelines.

Note: Protecting your intellectual property is important. If you plan to trademark your company or product, act early and do so in both Chinese and English.

4. Apply for approval with your local authority

Necessary documents can vary depending on where and with who you are doing business. Be sure to comply with the regulations specific to your location. The documents must be converted to Chinese by a reliable translation company. Applications can take up to 90 days to be approved.

5. Find a bank

Once you have approval, you have 30 days to register with the Chinese Administration for Industry and Commerce (AIC) and apply for a business license. Once you have the license, you will be able to open a Chinese bank account.

 

Know more: Authenticating your US documents to be used in China

With these five steps complete, you have solidified a foundation.  Now it is time to focus on the particulars.  Exactly which way to go next will depend on your specific business plan.  Again, this can get confusing; but Incorp China is here to help.  Whether your next step is filing a trademark, registering for an ICP License, or finding a general manager and employees you can trust, we know how to get it done right.

 

“The time is now. Be part of the process as China becomes tomorrow’s economic powerhouse.”

Ready to expand your business and break into China’s upcoming markets? Call now for a consultation with an IncorpChina team member, and establish your most important relationship in China success.

+1 561 729 6508 | [email protected]

 

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Once in China, Do as the Chinese Do

 

Considering the dramatic cultural differences from the West, doing business in China can be difficult.  How well you adapt to the deeply rooted Chinese customs will profoundly influence the success of your business.

In China, cultural competence takes time. Business culture is very traditional, involving behaviors and beliefs that date back over 5000 years. That said, having a local representative who clearly understands both sides is crucial.

 

You will quickly learn:

Guanxi is everything. Defined as the connections and relationships which facilitate business and commerce, this is the most critical aspect of Chinese business culture. Cultivating strong relationships is the first step towards any Chinese market.  To properly establish Guanxi, awareness of and compliance with the following aspects of Chinese business culture should be the primary focus of all companies.

 

1. Basic Communication

In China, even at the most fundamental level, we find a tone language entirely different from common western dialects. Having someone able to communicate in a native Chinese tongue will be favored and seen as a sign of respect.

Clear communication by your host country’s standards may translate rudely in China. While the individualistic mindset of Western business fosters the idea of speaking up, of using as many words necessary to communicate one’s point, China business culture favors extreme modesty.

Furthermore, there are considerable differences in both verbal and non-verbal communication.

To name a few:
• Greetings and pleasantries differ
• Chinese names are reversed compared to western names
• Eye-contact is not necessarily a sign of respect
• Casual talk is a necessary precursor to business

2. Collectivist Culture

Westerners often view themselves as highly independent entities, whereas in China, an interdependent mindset is essential. China’s workforce is built on discipline and corporation, where the group always takes priority over the individual.

To showcase one’s commitment to the bigger picture, one is expected to act in a calm collective manner at all times. They should listen with intent and always be heedful to the needs of others.

3. Hierarchal Society

In China, hierarchy holds true, and status is power. Seniority must always be respected.

Especially in the decision-making process, seniority dictates authority and patience is pivotal. Decisions made with haste will be seen as insulting. Even simple matters are expected to be processed by multiple people until eventually, the manager with the highest status decides on a verdict.

4. Saving Face or giving face, especially in the midst of conflict

The concept of face, or miànzi, is an essential abstract notion that governs all social interaction in Chinese culture.

Extreme emphasis is placed on harmony and public dignity. People are expected to further these values by “giving face” or “saving face.”

To give or save face, extensive etiquette must be applied to all interactions. Composure is key. Limit expression to what is appropriate, and continuously consult a trusted Chinese representative on how to behave.

Especially in the midst of conflict, the art of “face” is vital. No matter the issue, maintaining face will always be the most pressing concern. You will find, negotiations often preserve harmony, and consequently save face, by implicitly working around a conflict, as opposed to confronting it straight on.

Such diversity may be overwhelming at first, but with patience and the right representatives, this highly educated, highly capable business atmosphere will generate authentic and successful long-term foundations.

“The time is now. Be part of the process as China becomes tomorrow’s economic powerhouse.”

 

 

Know more: How Important Is To Have Local Representatives In China?

Ready to expand your business and break into China’s upcoming markets? Call now for a consultation with an IncorpChina team member, and establish your most important relationship in China success.

+1 561 729 6508 | [email protected]

#chinesebusiness #chineseculture #whychina #chineseindustry 

 

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