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What to Consider Before Moving Business Operations to China

July 02, 2014

The many advantages and drawbacks of doing business in China.

With a population of around 1.39 billion and the world's second largest economy, it is no wonder why China is attractive to entrepreneurs. Though business in China often promises financial success, there are some obvious challenges involved in the process. It is up to companies to use their discretion in deciding whether business in China will merit success.

Why China?

The Chinese government stresses innovation as a key to financial victory which, in turn, gives incentive to investors and entrepreneurs to move business there. China's developing economy indicates that China is prepared to forfeit fast growth for lasting economic reform. In addition, China plans to rely more on the services sector through a mass-consumer society, which would mean more business prospects for foreign companies planning to offer their products and services in China. Though China is not as inexpensive as it used to be, its advanced infrastructure and logistics compared to Vietnam or Indonesia, for example, make it dominate in the manufacturing world.

Tax Considerations

For assistance in complying with the tax and financial reporting, partnering with a local company can help! The legal and tax system in China is entirely different from the system in many Western countries, so it is important to make sure you understand the local tax laws.

Do Your Research

Business in China can lead to great economic triumph if American entrepreneurs carry out the necessary research and realize that operations in China may be comparable in price; however there could be long-term benefits for their companies. A detailed plan of action to tackle the evident issues could point to ultimate success for your business in China.

Please read our white paper: Why do you want to do business in China? for a discussion with KLR's Paul Oliveira, Director of International Tax and Dezan Shira's Sabrina Zhang, National Tax Partner, regarding business in China.

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