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Doing Business in China

Doing Business in China

The growth of the Chinese economy in recent decades is without historical comparison: China has metamorphosed from a centrally planned system, largely closed to international trade, to a market-oriented socialist economy with a rapidly growing private sector.

A major player in global markets, China presents huge opportunities for global businesses looking to expand or hire employees overseas. At the same time, however, many things are done differently there and a nuanced understanding of local culture is required.r

Introduction to the Chinese Economy

Historical Context

From the initiation of economic reforms in 1978, China embarked on a journey of exponential growth, lifting more than 850 million people out of poverty, a feat unparalleled in history. With a GDP (PPP) surpassing that of the United States, China is at the forefront as one of the largest economies globally.

Sectoral Composition

The Chinese economy is a vibrant blend of manufacturing and services sectors. The secondary sector, comprising industries like manufacturing and construction, has been the stronghold of the Chinese economy. However, the tertiary sector, encompassing services such as retail, banking, and tourism, has been expanding substantially, reflecting a more diversified economic landscape.

International Relations and Trade

China’s participation in the World Trade Organization (WTO) marked a pivotal point in its economic history, fostering open trade and international cooperation. Today, it stands as a significant trading partner to many countries, involved intricately in the global supply chain.

An Overview of Doing Business in China

Regulatory Environment

Entering the Chinese market requires an in-depth understanding of the regulatory landscape. The Chinese government has implemented reforms to streamline administrative procedures and foster a more conducive environment for foreign businesses. Despite the reforms, businesses still encounter bureaucratic hurdles, and understanding the regulatory nuances remains crucial.

Intellectual Property Rights

Over the years, China has worked significantly to strengthen its intellectual property rights (IPR) landscape. Yet, the protection of intellectual property remains a notable concern for foreign businesses, necessitating meticulous planning and strategic intellectual property management.

China Market Entry Strategies

1. China Employer of Record (EOR)

As you venture into the Chinese market, leveraging the services of a China Employer of Record (EOR) can be a good strategic move. A China EOR acts as a legal employer for your staff in China, mitigating the risks and administrative burdens associated with hiring and payroll compliance. Using an EOR allows you hire in China in 24 hours, without the need to set up a local legal entity. 

To find out more, read our Review of the Best EORs in China.

A China EOR can navigate the intricate labyrinth of Chinese labor laws, tax regulations, and statutory benefits for you, while you retain complete control over the day-to-day activities and responsibilities of your employees. A China EOR is particularly useful for quick market entry, allowing you to test the waters without establishing a legal entity initially.

By facilitating compliant and efficient staffing solutions, a China EOR can be your cornerstone in building a robust and compliant business foundation in the Chinese market. It allows foreign companies to focus on scaling their operations and strategy, without being bogged down by administrative hurdles and complexities, thereby serving as a significant catalyst in fostering business growth and expansion in China.

2. Wholly Foreign-Owned Enterprises (WFOEs)

Establishing a Wholly Foreign-Owned Enterprise (WFOE) allows foreign investors to operate as a locally incorporated company, giving them greater control over their business operations. These are now more commonly known by the term ‘foreign-invested enterprise’.

3. Joint Ventures (JVs)

Engaging in joint ventures with local Chinese firms can be a strategic move to tap into local market insights and networks. Care must be taken, however, to ensure that the interests of your company are properly protected. 

4. Representative Offices

Foreign companies can establish representative offices in China to conduct market research and business liaison activities, though they are restricted from engaging in direct business operations

Chinese Market Opportunities and Challenges

Expanding your business into China brings both benefits and challenges. We consider some of the main ones below. 


Technological Advancements

China is home to a rapidly evolving technological landscape, presenting a wealth of opportunities in sectors such as e-commerce, artificial intelligence, and green technologies.

A Massive Consumer Market

The Chinese consumer market, characterized by a burgeoning middle class with an increasing disposable income, offers tremendous potential for businesses offering premium and quality products.


Cultural Nuances

Understanding the Chinese culture, with its unique preferences and behavioral patterns, is fundamental to building successful business relations.


The Chinese market is fiercely competitive, with domestic companies posing a significant challenge to foreign businesses. Hence, building a unique value proposition is crucial.

Leveraging the Digital Landscape


The digital transformation in China is prominently seen in the e-commerce sector, with platforms like Alibaba and reigning supreme. Understanding the e-commerce dynamics and leveraging these platforms can be a significant growth driver.

Digital Payments

China leads in the digital payment landscape, with platforms like Alipay and WeChat Pay facilitating seamless transactions. Integrating digital payment solutions can enhance the business-consumer interaction manifold.

Sustainable Business Practices

In line with global trends, there is an increasing emphasis on sustainable and responsible business practices in China. Adopting green technologies and focusing on corporate social responsibility (CSR) can foster goodwill and business sustainability.

Doing business in China — are you ready?

Doing business in China brings both opportunities and challenges. The best way of navigating your way through this is to engage a trusted China hiring or expansion partner. For more information on engaging a China EOR or China PEO read our detailed guides. 


Building a network with local government bodies, industry associations, and business communities in China is an important way of establishing your global company there. This is something that a local expansion or hiring partner may be able to help you with. 

Yes — an educated and technologically-advanced workforce combined with affordable labor hire costs makes China an ideal location for recruiting overseas.