SlideShare ist ein Scribd-Unternehmen logo
1 von 4
Downloaden Sie, um offline zu lesen
4 dangers foreign companies trading in China need to look
out for!
www.hongdaservice.com /blog/5-dangers-foreign-companies-trading-in-china-need-to-look-out-for
The dangers of doing business in China!
Access to 'the world's factory' and its latest products (at the best prices) is something that is very appealing to those
looking at doing business in China, but navigating business on this side is rife with dangers that many who jump in
head first fail to avoid until it is too late.
In this blog we will help foreign companies trading in China stay on the side of the law and avoid huge monetary
mishaps by pointing out 4 dangers they need to look out for!
1) China company formation (and the mishaps of choosing the wrong business entity)
One of the great things about doing business in China is the fact that there are a number of business vehicles one
can choose to register, each with there own strengths and weaknesses, set up requirements and so on. Things,
however, start to take a turn for the worst when businesses run into legal issues that arise from not registering the
appropriate business entity, or when they do not clearly define their business scope in the Articles of Association, or
if they do not fully comply with the specified registration requirements. We have written a fair amount of articles on
registering each of the various business vehicles one can set up in China, and it is crucial that one knows exactly
what they are getting themselves into before committing all their money and resources to it.
What can I do to avoid this danger?
Read the resources below:
WFOE (Wholly Foreign Owned Enterprise)
China WFOE registration: A brief overview
5 careless mistakes foreigners make when setting up a WFOE in China
China Representative Office
What is a representative office in China?
How to set up a WFOE in China from a China rep office
China Joint Venture
The pros and cons of embarking on a joint venture in China's PRD
Shenzhen Qianhai Company
Qianhai company set up: What is Shenzhen's Qianhai zone? Why go there?
Hong Kong Company
Why Hong Kong company formation could be the key to avoid China litigation
Hong Kong company formation: Why bother?
Want to see how all of these companies stack up against each other?
2) You are dealing with the factory directly! Or are you?
When it comes to sourcing products from China, it is of the utmost importance that traders establish with whom they
are dealing with! A lot of trading companies pose as the manufacturers themselves to ensure you that you are
getting the best deal available, when in fact they have added a healthy markup on top for themselves. Not only does
this stop one from getting a competitive deal, but if there is a breach of contract due to shoddy quality or not fulfilling
the order, it is a whole lot more difficult to get justice as many trading companies do not keep substantial assets on
hand.
What can I do to avoid this danger?
The important thing is to do your research in ensuring that the people you are dealing with are in fact a legal
business entity, and that they have the appropriate licenses to conduct business in China. Start your search online,
check to see where your potential partners have an online presence, ask to see their business licenses, set up
Skype calls to discuss finer details and make the effort to go and see their factory premises.
3) Register your trademark before someone else beats you to it!
If you are working with a factory on this side that is helping you to manufacture your own products or components, it
is critical that you protect your brand's interests by registering your trademark. Registering a trademark in China is
based on a 'got there first' basis, and as such many foreign companies fall victim to trademark/IP theft. Many
foreign companies also incorrectly assume that simply registering their trademark in their own country means that
they are safe in China, but this can not be further from the truth. It is up to you to ensure that your trademark is
registered both in your own country and in China!
What can I do to avoid this danger?
Read the resource below:
How To Register Trademarks In China: Beat The Block!
4) The devils hiding in Chinese contracts
Drawing up a contract is certainly an important part of helping to protect one's interests in China, but as to how far
the contract will go to protect them is a whole different story. Many contracts that are drawn up lack enforcability due
to the fact that they are not specific enough. Whilst terms may imply certain things where you come from, or in your
language, the same may not hold up in a Chinese court of law.
What can I do to avoid this danger?
Do absolutely everything you can to ensure that you draw up an enforceable contract to help protect yourself! Make
sure that the contract is in Chinese and that is applies Chinese law. Don't generalize contract terms, be very specific
to ensure that the contract is as iron clad as possible.
Takeaways
Foreign companies trading in China absolutely need to:
Establish the appropriate business entity in China, comply with its registration requirements and clearly
define its business scope
Do thorough research on their potential partners online, ask them to provide a copy of their business license,
registration documents and tax statements for a period of one year to ensure that they are a legal entity,
make the trip out to their factory
Research their trademark in the SAIC database, register their trademark and re-register it before it expires
Draw up an enforceable contract that leaves no room for generalization, make sure that the contract is in
both English and Chinese and that is applies Chinese law
Want to know more about doing business in China?
Click below to download our 10 Step Guide to Chinese Business Culture & Etiquette for everything you need to
know about business in China!
4 dangers foreign companies trading in China need to look out for!

Weitere ähnliche Inhalte

Andere mochten auch

Pelatihan cbt otomotif 10 001-16-k (3)
Pelatihan cbt otomotif 10 001-16-k (3)Pelatihan cbt otomotif 10 001-16-k (3)
Pelatihan cbt otomotif 10 001-16-k (3)Eko Supriyadi
 
Slides Curso Digital
Slides Curso DigitalSlides Curso Digital
Slides Curso Digitalsmgmatheus
 
Da escola 2.0 para a 3.0: da conservação à inovação!
Da escola 2.0 para a 3.0:  da conservação à inovação!Da escola 2.0 para a 3.0:  da conservação à inovação!
Da escola 2.0 para a 3.0: da conservação à inovação!Carlos Nepomuceno (Nepô)
 
EQUAZIONI e DISEQUAZIONI di II GRADO - ESEMPIO 2 - NUMERI COMPLESSI - CALCOLI...
EQUAZIONI e DISEQUAZIONI di II GRADO - ESEMPIO 2 - NUMERI COMPLESSI - CALCOLI...EQUAZIONI e DISEQUAZIONI di II GRADO - ESEMPIO 2 - NUMERI COMPLESSI - CALCOLI...
EQUAZIONI e DISEQUAZIONI di II GRADO - ESEMPIO 2 - NUMERI COMPLESSI - CALCOLI...Ist. Superiore Marini-Gioia - Enzo Exposyto
 
10 swift 열거형구조체클래스
10 swift 열거형구조체클래스10 swift 열거형구조체클래스
10 swift 열거형구조체클래스Changwon National University
 
Carbon pool measurement of a growing stock final
Carbon pool measurement of a growing stock finalCarbon pool measurement of a growing stock final
Carbon pool measurement of a growing stock finalMd. Anisur Rahman Emon
 
Gravitation and cosmology
Gravitation and cosmologyGravitation and cosmology
Gravitation and cosmologyJaime Zhang
 
Transferencias documentales
Transferencias documentalesTransferencias documentales
Transferencias documentalesDavid Gómez
 
παρουσίαση1
παρουσίαση1παρουσίαση1
παρουσίαση1kstaik
 

Andere mochten auch (13)

Pelatihan cbt otomotif 10 001-16-k (3)
Pelatihan cbt otomotif 10 001-16-k (3)Pelatihan cbt otomotif 10 001-16-k (3)
Pelatihan cbt otomotif 10 001-16-k (3)
 
Slides Curso Digital
Slides Curso DigitalSlides Curso Digital
Slides Curso Digital
 
Mmml
MmmlMmml
Mmml
 
Da escola 2.0 para a 3.0: da conservação à inovação!
Da escola 2.0 para a 3.0:  da conservação à inovação!Da escola 2.0 para a 3.0:  da conservação à inovação!
Da escola 2.0 para a 3.0: da conservação à inovação!
 
EQUAZIONI e DISEQUAZIONI di II GRADO - ESEMPIO 2 - NUMERI COMPLESSI - CALCOLI...
EQUAZIONI e DISEQUAZIONI di II GRADO - ESEMPIO 2 - NUMERI COMPLESSI - CALCOLI...EQUAZIONI e DISEQUAZIONI di II GRADO - ESEMPIO 2 - NUMERI COMPLESSI - CALCOLI...
EQUAZIONI e DISEQUAZIONI di II GRADO - ESEMPIO 2 - NUMERI COMPLESSI - CALCOLI...
 
10 swift 열거형구조체클래스
10 swift 열거형구조체클래스10 swift 열거형구조체클래스
10 swift 열거형구조체클래스
 
Sico
SicoSico
Sico
 
Faraday cage
Faraday cageFaraday cage
Faraday cage
 
Doppler effect
Doppler effectDoppler effect
Doppler effect
 
Carbon pool measurement of a growing stock final
Carbon pool measurement of a growing stock finalCarbon pool measurement of a growing stock final
Carbon pool measurement of a growing stock final
 
Gravitation and cosmology
Gravitation and cosmologyGravitation and cosmology
Gravitation and cosmology
 
Transferencias documentales
Transferencias documentalesTransferencias documentales
Transferencias documentales
 
παρουσίαση1
παρουσίαση1παρουσίαση1
παρουσίαση1
 

Kürzlich hochgeladen

UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISINGUNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISINGlokeshwarmaha
 
NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023Steve Rader
 
To Create Your Own Wig Online To Create Your Own Wig Online
To Create Your Own Wig Online  To Create Your Own Wig OnlineTo Create Your Own Wig Online  To Create Your Own Wig Online
To Create Your Own Wig Online To Create Your Own Wig Onlinelng ths
 
Cracking the ‘Business Process Outsourcing’ Code Main.pptx
Cracking the ‘Business Process Outsourcing’ Code Main.pptxCracking the ‘Business Process Outsourcing’ Code Main.pptx
Cracking the ‘Business Process Outsourcing’ Code Main.pptxWorkforce Group
 
Developing Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, OursDeveloping Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, OursKaiNexus
 
Data skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story pointsData skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story pointsyasinnathani
 
Lecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb toLecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb toumarfarooquejamali32
 
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfGraham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfAnhNguyen97152
 
A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.mcshagufta46
 
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfTalent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfCharles Cotter, PhD
 
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptxHELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptxHelene Heckrotte
 
Introduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxIntroduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxJemalSeid25
 
Plano de marketing- inglês em formato ppt
Plano de marketing- inglês  em formato pptPlano de marketing- inglês  em formato ppt
Plano de marketing- inglês em formato pptElizangelaSoaresdaCo
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access
 
Fabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and FestivalsFabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and FestivalsWristbands Ireland
 
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...Khaled Al Awadi
 
7movierulz.uk
7movierulz.uk7movierulz.uk
7movierulz.ukaroemirsr
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access
 
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdfAMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdfJohnCarloValencia4
 
Building Your Personal Brand on LinkedIn - Expert Planet- 2024
 Building Your Personal Brand on LinkedIn - Expert Planet-  2024 Building Your Personal Brand on LinkedIn - Expert Planet-  2024
Building Your Personal Brand on LinkedIn - Expert Planet- 2024Stephan Koning
 

Kürzlich hochgeladen (20)

UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISINGUNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
 
NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023
 
To Create Your Own Wig Online To Create Your Own Wig Online
To Create Your Own Wig Online  To Create Your Own Wig OnlineTo Create Your Own Wig Online  To Create Your Own Wig Online
To Create Your Own Wig Online To Create Your Own Wig Online
 
Cracking the ‘Business Process Outsourcing’ Code Main.pptx
Cracking the ‘Business Process Outsourcing’ Code Main.pptxCracking the ‘Business Process Outsourcing’ Code Main.pptx
Cracking the ‘Business Process Outsourcing’ Code Main.pptx
 
Developing Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, OursDeveloping Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, Ours
 
Data skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story pointsData skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story points
 
Lecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb toLecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb to
 
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfGraham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
 
A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.
 
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfTalent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
 
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptxHELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
 
Introduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxIntroduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptx
 
Plano de marketing- inglês em formato ppt
Plano de marketing- inglês  em formato pptPlano de marketing- inglês  em formato ppt
Plano de marketing- inglês em formato ppt
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024
 
Fabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and FestivalsFabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and Festivals
 
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
 
7movierulz.uk
7movierulz.uk7movierulz.uk
7movierulz.uk
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024
 
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdfAMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
 
Building Your Personal Brand on LinkedIn - Expert Planet- 2024
 Building Your Personal Brand on LinkedIn - Expert Planet-  2024 Building Your Personal Brand on LinkedIn - Expert Planet-  2024
Building Your Personal Brand on LinkedIn - Expert Planet- 2024
 

4 dangers foreign companies trading in China need to look out for!

  • 1. 4 dangers foreign companies trading in China need to look out for! www.hongdaservice.com /blog/5-dangers-foreign-companies-trading-in-china-need-to-look-out-for The dangers of doing business in China! Access to 'the world's factory' and its latest products (at the best prices) is something that is very appealing to those looking at doing business in China, but navigating business on this side is rife with dangers that many who jump in head first fail to avoid until it is too late. In this blog we will help foreign companies trading in China stay on the side of the law and avoid huge monetary mishaps by pointing out 4 dangers they need to look out for! 1) China company formation (and the mishaps of choosing the wrong business entity) One of the great things about doing business in China is the fact that there are a number of business vehicles one can choose to register, each with there own strengths and weaknesses, set up requirements and so on. Things, however, start to take a turn for the worst when businesses run into legal issues that arise from not registering the appropriate business entity, or when they do not clearly define their business scope in the Articles of Association, or if they do not fully comply with the specified registration requirements. We have written a fair amount of articles on registering each of the various business vehicles one can set up in China, and it is crucial that one knows exactly what they are getting themselves into before committing all their money and resources to it. What can I do to avoid this danger? Read the resources below: WFOE (Wholly Foreign Owned Enterprise)
  • 2. China WFOE registration: A brief overview 5 careless mistakes foreigners make when setting up a WFOE in China China Representative Office What is a representative office in China? How to set up a WFOE in China from a China rep office China Joint Venture The pros and cons of embarking on a joint venture in China's PRD Shenzhen Qianhai Company Qianhai company set up: What is Shenzhen's Qianhai zone? Why go there? Hong Kong Company Why Hong Kong company formation could be the key to avoid China litigation Hong Kong company formation: Why bother? Want to see how all of these companies stack up against each other? 2) You are dealing with the factory directly! Or are you? When it comes to sourcing products from China, it is of the utmost importance that traders establish with whom they are dealing with! A lot of trading companies pose as the manufacturers themselves to ensure you that you are getting the best deal available, when in fact they have added a healthy markup on top for themselves. Not only does this stop one from getting a competitive deal, but if there is a breach of contract due to shoddy quality or not fulfilling the order, it is a whole lot more difficult to get justice as many trading companies do not keep substantial assets on hand. What can I do to avoid this danger? The important thing is to do your research in ensuring that the people you are dealing with are in fact a legal business entity, and that they have the appropriate licenses to conduct business in China. Start your search online, check to see where your potential partners have an online presence, ask to see their business licenses, set up Skype calls to discuss finer details and make the effort to go and see their factory premises.
  • 3. 3) Register your trademark before someone else beats you to it! If you are working with a factory on this side that is helping you to manufacture your own products or components, it is critical that you protect your brand's interests by registering your trademark. Registering a trademark in China is based on a 'got there first' basis, and as such many foreign companies fall victim to trademark/IP theft. Many foreign companies also incorrectly assume that simply registering their trademark in their own country means that they are safe in China, but this can not be further from the truth. It is up to you to ensure that your trademark is registered both in your own country and in China! What can I do to avoid this danger? Read the resource below: How To Register Trademarks In China: Beat The Block! 4) The devils hiding in Chinese contracts Drawing up a contract is certainly an important part of helping to protect one's interests in China, but as to how far the contract will go to protect them is a whole different story. Many contracts that are drawn up lack enforcability due to the fact that they are not specific enough. Whilst terms may imply certain things where you come from, or in your language, the same may not hold up in a Chinese court of law. What can I do to avoid this danger? Do absolutely everything you can to ensure that you draw up an enforceable contract to help protect yourself! Make sure that the contract is in Chinese and that is applies Chinese law. Don't generalize contract terms, be very specific to ensure that the contract is as iron clad as possible. Takeaways Foreign companies trading in China absolutely need to: Establish the appropriate business entity in China, comply with its registration requirements and clearly define its business scope Do thorough research on their potential partners online, ask them to provide a copy of their business license, registration documents and tax statements for a period of one year to ensure that they are a legal entity, make the trip out to their factory Research their trademark in the SAIC database, register their trademark and re-register it before it expires Draw up an enforceable contract that leaves no room for generalization, make sure that the contract is in both English and Chinese and that is applies Chinese law Want to know more about doing business in China? Click below to download our 10 Step Guide to Chinese Business Culture & Etiquette for everything you need to know about business in China!