| One of the largest countries in the world, China has a | | | | agent or distributor in China, a Representative Office |
| population of 1.3 billion people which makes up for a | | | | (RO) can also be set up after applying to the Chinese |
| fifth of the world's total population. Today, millions of | | | | government. The third approach would be to set up |
| goods are manufactured and exported from China | | | | a wholly owned foreign company in China. While this |
| reaching every recess of the world. At a rapid | | | | is one of the most popular options available, a wholly |
| growth rate, it has reached the position of being the | | | | owned foreign company can be set up only after |
| second largest economy in the world with | | | | getting a license granted by the Chinese government. |
| opportunities for foreign markets in almost every | | | | The last available option would be to set up a joint |
| existing sector. | | | | venture with a local partner. In this case, the foreign |
| China's growing economy threw open opportunities | | | | investor has to open an RO and find a partner to |
| to foreign investors in 1979 when China established | | | | continue the business. However, a joint venture's |
| Investment Zones (IZ) offering foreign investors | | | | success would depend on the partner's efficiency to |
| incentives like discounts on rent, tax holidays and | | | | a great extent. |
| better infrastructure. Now that China is a member of | | | | While most trading is carried out through complex |
| the World Trade Organisation, such discrimination | | | | letters of credit, other options of payments are |
| between local and foreign businesses is likely to be | | | | either through Chinese Yuan or US Dollars. However, |
| brought to a halt. | | | | here it must be remembered that transaction banks |
| Recognising its drawbacks, the Chinese Government | | | | in China have complex rules and Chinese currency is |
| has already started investing in its infrastructure | | | | very difficult to exchange outside its country. Trading |
| (telecommunications, power and water). Since | | | | in dollars is also not free from problems as it carries |
| transportation is also an important aspect of | | | | exchange rate fluctuation risks. |
| international trading, it must be remembered that | | | | Another aspect of doing business with the Chinese is |
| China is a mountainous region and 80 percent of | | | | importance of interpersonal relations. The Chinese |
| China is rural. Thus, while freight to its major cities | | | | regard a personal relationship of trust necessary |
| can be done through air or sea, rural parts of the | | | | before transacting financially with a foreign trader. |
| country would be best accessed through surface | | | | Also, the Chinese people have a rather stringent |
| transport which takes approximately the same time | | | | etiquette. Breaching their etiquette is tantamount to |
| as air freight but is a cost-efficient option. | | | | insult, and will prove to be a point in the business. |
| Trading in China can be done in four different ways. | | | | Comprehending and obeying these are essential, |
| While the easiest method would be to appoint a local | | | | especially when meeting for the first time. |