Guest Speaker: Renee Zhou, Business & Private Client Advisory, ShineWing
In the financial industry for more than 10 years
Worked 8 years at PWC in managing Chinese clients
Spent 2 years in the Asian Private Bank at the Commonwealth Bank
Passionate about building bridges between Australia and China
Finding the right people as your business partners
To work with Chinese people, you must understand their habits and behaviours. In Western businesses, many issues are discussed up front whereas in China, people tend to bond in smaller trusted circles. This can lead to a situation where it’s hard for people to speak directly with each other. Meeting in the middle is very important for both Australians and Chinese, they need to travel to their respective countries.
In Chinese culture, you build your own success thanks to other people’s success. When you help others, you benefit even more from their success. Renee has experienced this at first hand. It is essential to find out what others really need, what they want to get out of a deal and what their strengths and weaknesses are.
Finding the right partners takes time. You can spend years building a relationship but it takes one mistake to ruin it. You need to invest in the people who are worth the effort. Once you manage to set up a potential deal, you need to know the non-negotiables, the key issues that can be deal-breakers.
Leveraging professional services: locally and on the ground in China
Nowadays, people have a lot of options when it comes to choosing a professional team: the Big 4, international coverage companies, Chinese teams in local firms. Selecting the best option is quite easy: the most suitable for you is the best. You need to find the people you like, you trust and who are suitable yo match your business plan. Renee Zhou also recommends using the same firm within countries for better information sharing.
When you go to a professional firm, you will always be asked a few questions and you must get your answers ready:
What’s your business plan? Your partner in China will then do several checks to see if you are ready.
What’s your existing structure?
Do you have your business license registered in China?
Do you have your plan ready for direct or indirect investment in China?
Are you aware of the international tax arrangements?
What are the challenges you are facing?
Renee thinks it’s better to have lawyers and consultants in the same room when you set up the initial structure. Take small steps, one by one.
Getting your structure right: legal, commercial, tax…
A typical structure is composed of 3 layers:
Commercial structure: you must know what you want from this business; it’s basically the business structure, what are the key skills of each jurisdiction you would like to have; it’s a high-level big picture. You give your business idea and why you want to go to China.
Legal structure: you have to know what legal entity you need to get into each jurisdiction. Each type of entity needs to apply for a business license, it’s crucial as it actually sets out what you can and can’t do in China. The more general your license is, the more expensive it will be and the more time it will take to be delivered.
Tax structure: your tax structure must be as efficient as possible.
In conclusion, you can’t look at China as one market, you have to choose your individual market. Take some time to find like-minded people who are looking for the same things in a business similar to yours. You need to link up with teams (tax, commercial, legal…) as early as possible. In the end, doing business in China is not hard but you need to get the initial processes set up right.
The next ACSME Roundtable topic will be “Protecting Your IP and Patents in China" on Monday, 29th October 2018. Register now via the link below.
You can also sign up for ACSME Membership to receive priority tickets for future monthly Roundtables.