A ready-made company in China and how to buy it in 2023
China is a gigantic economic center, but it takes work for foreigners to open a business there. To accomplish such a mission, you must go through rigorous checks. Nevertheless, if you act through intermediaries, there are opportunities to work in the Chinese market. One of them is to buy a ready-made company in China in 2023.
The advantages of China for business
China is focused on international business, so it actively implements programs that can interest both Chinese and foreign investors. For example, the government helps young companies, provides subsidies, and supports production and logistics. As a result, foreign businesses can get goods to trade at a meager price due to low import and export rates.
Buying a company to operate domestically will save on taxes. In addition, the government supports rural businesses, so it offers more low rates in exchange for new jobs than working in densely populated areas.
Other advantages include the following:
- developed commerce and manufacturing;
- stable economic and political situation, which allows for predicting the development of the market accurately;
- the absence of price hikes;
- developed electronic commerce;
- the ability to open an account in a Chinese bank;
- qualified and conscientious staff with excellent knowledge of the English language.
A businessperson can move and live in China on an investment visa, which allows taking advantage of various benefits and attractive business-related offers.
Foreign business in China
Among the disadvantages of China is the lengthy registration of the company. The way out is to buy a ready-made business. It can be either an active enterprise or a shelf company that was explicitly opened for sale. A running business has to be checked thoroughly before buying, as it may have hidden debts, liabilities, etc. There are no problems with a shelf company purchased from a reputable seller.
For investors who want to buy a ready-made business in China in 2023, there are options:
- a company that a foreigner wholly own;
- a joint venture;
- a business in Hong Kong, which is a special administrative district of China, open to foreign investors;
- wholly foreign-owned enterprise.
Before 2020, foreigners in China could register three types of limited liability companies (e.g., WFOEs). They were called "foreign-financed enterprises," and each had its restrictions. However, in 2020, the Foreign Investment Act was passed, eliminating the name WFOE and the other types of companies. In their place was a "foreign-invested enterprise" that could fully operate under PRC law.
Another option is an organization where a Chinese partner is involved. This option is suitable for businesses that are "closed" to foreign companies. In this case, it is necessary to discuss all the points (management plans, investments, control) in detail with the partner so that no disputes arise in the future.
Ready-made business in Hong Kong
If you are planning an international business, in some cases (for example, IT), buying a ready-made company in Hong Kong is more profitable. Unlike mainland businesses, you won't have to pay tax on income generated out of state. There are no currency controls, and there are many other advantages. The law allows you to hire a nominee director if the owner does not live there.
How to buy a Chinese company in 2023
To buy a ready-made company in China in 2023, contact IT-OFFSHORE experts.