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Negotiating your China Business Entry
By andrew | May 7, 2007
Every China business entrant needs to put together a plan for dealing with government regulations, certification and paperwork. Warning: Many Chinese locals will often tell you that a certain type of business is unregulated, under-regulated, or that regulations are ignored or unclear. Be EXTREMELY skeptical of this sort of logic. While it may be true for them in their particular industry and geographic location, it may be extremely inaccurate for you.
Dealing with Chinese regulations is a 3 step process.
1) Determine what regulations apply to your individual case. Remember, China has multiple layers of governance and regulatory authority – just like the US and the EU. Find out what you are up against BEFORE you make any other plans.
2) Application procedures. These can be extremely cumbersome. You are not ONLY dealing with the language issue (which can be extremely daunting), but also the complex and culturally-loaded problems involving the application process.
3) Agents, consultants and service providers. Many westerners have found it easier to avoid the problem by simply hiring a go-between, agent or supplier. This can be a win-win situation, but you need to do your homework. First, find out if your proposed transaction is legal. Next, make certain that your new partner has the ability to do complete the transaction. Finally, make a judgment about the honesty and integrity of your service provider. While dishonesty and cheats are rampant, incompetence and over-selling will lead to the same end. Do your due diligence.
If anyone suggests a bribe or other illegal activity, be very wary. Most routine business applications and certifications are very bureaucratic in nature, and don’t require special connections. Bribery is illegal in China, and once you get involved in this sort of activity you are operating outside the law with no recourse, no protection, no hope and no redemption. Your call, though.
Topics: Business Entry, Due diligence |
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