China continues to be an attractive region to start or expand your business due to its ranking as one of the top consumer markets globally. You may have also noticed how favorably popular western brands have fared in China. But there is something else to consider before venturing to China to do business, you will be hit with a long list of demands.
You may already be aware of the logistical and cultural factors involved in starting or moving your company to China. But there are other factors to consider that you may not be aware of. Before you start doing business in China, be prepared to make a few compromises.
It is China’s position that there is only one government and considers Taiwan, which is self-governed, to be part of China’s territory. China also considers Hong Kong and Macau as special administrative regions. There have been instances where China has acted against companies that have implied in certain materials that the areas are independent. This could be important if you are trying to reach customers in those areas.
China’s cyber-security law
In 2017, China made a law to increase restrictions on transferring data outside its borders. This new law forces businesses to store their data locally in China. Both Apple and Google have made big changes on how they handle their data to comply with the mandate. Accessing this information when not in China, and privacy issues, may be concerns for your business.
One of the requirements China has for foreign corporations who wish to do business there is to partner with a Chinese entity. The requirements around joint ventures continue to be a point of contention in US-China trade relations. One claim from foreign businesses is that China companies who they are partnered up with ask to see intellectual property prior to the venture being finalized.
If you are an internet company, you will have to follow strict rules regarding censored content in China. As an example, China has asked Apple to remove apps from its Chinese App Store that it had deemed inappropriate.
Doing business in China means you will have to toe the line and make any changes that are asked of you. If you do not stay on China’s good side and adhere to the rules that are set forth for being there, you may be jeopardizing your business success.