Doing Business in Shanghai

China is relatively restrictive when it comes to setting up businesses although this is changing. The government is keen to attract foreign investment but most are in the form of joint ventures (JV) between foreign and Chinese companies. This is particularly true in such industries such as the media. Other sectors, such as that of telecommunications service providers, cannot even be minority-owned by foreigners, while telecommunications equipment makers are usually all joint ventures.

This is not to say there are no exceptions. Many smaller foreign companies have succeeded in setting up wholly owned foreign enterprises. It is increasingly common for a foreign investor to begin with a JV partner to facilitate setting up a business and dealing with government officials. Eventually, these foreign investors simply buy out the JV partner. The practice may seem ridiculous, but many believe it is better to make a one-off payment than continue having to pay salaries etc. for years to come.

The best rule of thumb is to investigate thoroughly any business opportunity before talking to any prospective partner. In many ways, China resembles the Wild West where anything goes. Chinese partners are often invaluable to navigate the murky depths of business in China and facilitate the setting up of a business. But be warned: Many foreign companies have found that the elaborate, unwritten code of rules which applies to everything-whether it is negotiating a contract or selling your product-often results in business disputes. Keep your eyes wide open and visualize any eventuality, particularly bad ones.

Best for business

Generally the best way to find out how to set up a business in Shanghai is to contact your local consular office and inquire about the opportunities and restrictions which affect people of your nationality.

Usually there is a government agency that has at least basic information on the steps a foreigner needs to take, numbers he needs to call and documentation required. You can try the Shanghai Ya Xin Business Consulting Co. for assistance in market entry. They are a US-registered joint venture company.

Shanghai Ya Xin Business Consulting Co.
Room 1505, 185 Si Ping Road, Shanghai
Tel: +86-21 6507-8381
Fax: +86-21 6507-8382

Shanghai and the surrounding environs all have special economic zones (SEZs) which offer different tax incentives etc. The best way to get this information is to contact your consulate in Shanghai or the Chinese consulate in your home country. The new financial and industrial/manufacturing center of Pudong is also one of the best bets for tax writeoffs and other incentives. You can try contacting the:

Economic and Trade Bureau of the Shanghai Pudong New Area
Room 7Q, First Trade Tower 985 Dongfang Rd.
Pudong New Area, Shanghai
Tel: +86-21 6876-7019; 6876-1766
Fax: +86-21 6876-1766

Business visas

Before you come to China you must get a travel visa. For business people, the best is a multiple entry visa that is good for six months. You CANNOT get one at the Shanghai Airport and they will promptly ship you back from whence you came without one. A work permit must similarly be arranged before you arrive. Both can be extended once you are here provided your passport is in good order and you have the appropriate letters from the company you are working with or for here in Shanghai.

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