What You Need to Know About Business in China

Let’s face it; today we live in an ever-shrinking world, one where international business is commonly practice by many different companies. From small firms exporting good across the globe to those opening offices in major cities in countries like China, understanding the rules, laws, and customs of a country is imperative for those who hope to be successful. Opening a business in China is slightly trickier than some other popular Asian countries, but for those willing to put in the time necessary to conform to the rules and regulations, China can be an excellent business base.


China has a culture that is entirely different from the western world. From digging up dragon bones to presenting gifts, the customs and practices in China are unfamiliar to most in the United States. Prior to opening an international business in China, it’s important to spend some time in the country, preferably with an informed guide, to begin to learn the customs. Failing to do so could lead to unintentional gaffes and insults that could quickly kill your new business venture in this exciting country.

Partners and Locations Count

Who and where you do business matters in China. In China, businessmen adhere to the cultural norm of driving expensive cars, wearing expensive clothing, and owning an expensive factory. Sadly, in some cases, this is little more than show. Be sure to perform credit checks and due diligence on any potential business partners to avoid finding out that what appears to be a competent and wealthy partner is instead a risky business choice at best.

Equally important is finding the best location for your new business in China. Some local government offices do offer preferential treatment to international business owners that can be significant. Be sure to check out the potential incentives and tax benefits of each area before deciding where to build your office or factory.

Paperwork, Paperwork, and More Paperwork
There are more rules and regulations in China than there are grains of sand in an hour glass, and it is your responsibility to follow each of them to the letter. Understanding how something as small as the language contained within your scope and business categorization can impact your ability to operate effectively in the country is critical. Tap into resources available at the United States Embassy, as well as business contacts within China, to make you are taking care of business the way you should be.

Opening a business in China can be lucrative, but this is not a journey to rush into. Make sure you fully understand all aspects of opening a business in China before spending any money. When you can answer the questions, “What is the cultural significance of a dragon bone?” and “What are your responsibilities in China as an employer?” you might just be ready.


Chinese textiles and Global Organic Textile Standards (GOTS)

Fashion may pride itself in keeping up with the times and this includes “green” fashion trends, but the textile manufacturing industry is one of the most polluting industries in the world. This is due to the effort that goes into producing cotton and synthetic fabrics but also because of the antiquated manufacturing techniques that are used to dye and finish fabric. In pursuit of the global effort to limit environmental damage, Global Organic Textile Standards (GOTS) is a certification process for every stage of textile manufacture including the ways in which chemicals and water are used and is the result of seven years of concerted effort.

China, which produces about 50 percent of the textiles such as dresses used in the US, creates 3 billion tons of soot every year and also wastes millions of tons of fabric rejected by buyers by either incinerating them or dumping them in landfills. A mill can use up to 200 tons of water for dyeing every ton of fabric and the rivers into which their waste is dumped are full of untreated toxic chemicals. Perhaps 1000 of China’s 50,000 textile mills are equipped with sensors that monitor the use of heat, water and chemicals and can provide demanding clients with reports on their environmental performance.

Despite the bottom line advantages of using environmentally friendly manufacturing methods, what else is required to get the other 49,000 of China’s textile mills to fall in line? NRDC has an initiative called Clean by Design, which encourages brands and retailers to include environmental factors to other factors such as costs and quality when they make their buying decisions. Big players in the apparel industry who have joined this initiative include Wal-Mart, GAP, Levi Strauss & Co and Nike.

If these giant companies as well as other big buyers could create criteria to qualify their suppliers on environmental considerations and create preferred suppliers only when these criteria are met, the whole textile manufacturing industry could be forced into a much greener environment. Surely, business considerations would then force the entire Chinese textile industry to be far more eco-friendly than it has hitherto been.


Can China clean up the pollution?

The pollution in China is reaching ridiculous levels, but the government may be ready to begin a real effort to clean things up.

China’s unprecedented growth in recent years has come at a terrible price. Two-thirds of its rivers and lakes are too polluted for industrial use, let alone agriculture or drinking. Just 1 in 100 of China’s nearly 600 million city dwellers breathes air that would be considered safe in Europe. At a time when arable land is in short supply, poisoned floodwaters have ruined many productive fields. And last year, ahead of most forecasts, China passed the U.S. to become the world’s largest source of greenhouse gases.

The immensity of these troubles has produced a result that may surprise many outside China: The nation has emerged as an incubator for clean technology, vaulting to the forefront in several categories. Among all countries, China is now the largest producer of photovoltaic solar panels, thanks to such homegrown manufacturers as Suntech Power (STP). The country is the world’s second-largest market for wind turbines, gaining rapidly on the U.S. In carmaking, China’s BYD Auto has leapfrogged global giants, launching the first mass-produced hybrid that plugs into an electrical outlet. “China is a very fast follower,” said Alex Westlake, a director of investment group ClearWorld Now, at a recent conference in Beijing.

Understanding they are in a global race, China’s leaders are supporting green businesses with policies and incentives. Beijing recently hiked China’s auto mileage standards to a level the U.S. is not expected to reach until 2020. Beijing also says it will boost the country’s share of electricity created from renewable sources to 23% by 2020, from 16% today, on par with similar targets in Europe. The U.S. has no such national goal.

While most environmentalists applaud these developments, China watchers are voicing two very different sets of concerns. Some question whether China will really stand by its ambitious targets and are worried by signs of backsliding as the recession in China’s key export markets drags down economic growth. Another group, interested mainly in America’s own industrial future, fears that China’s growing dominance in certain green technologies will harm budding cleantech industries in the U.S. After all, China’s emergence comes just as the Obama Administration is trying to nurture these same types of ventures, hoping to generate millions of green jobs. Many of these U.S. businesses will have trouble holding their own against low-price competitors from China.

Beijing’s green intentions will soon be put to the test. China is in the midst of the biggest building boom in history. A McKinsey & Co. study estimates that over 350 million people—more than the U.S. population—will migrate from the countryside into cities by 2025. Five million buildings will be added, including 50,000 skyscrapers—equal to 10 New York Cities. And as quickly as new offices and houses multiply, they are filled with energy-hungry computers, TVs, air conditioners, and the like, sharply increasing demand for electricity, which comes mainly from coal-powered plants.

There are two real questions here. The first is whether China can invest in new technologies and create a clean energy industry. On that front there should be no doubt, and other countries, like the United States, who want to develop green jobs need to move swiftly in order to compete with China.

The second question, and one that affects global warming, relates to whether China can make real progress on reducing pollution within its own borders. On that question the jury is still out.


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