A medium sized manufacturing business setting up in China

We are a medium size manufacturing business based in Australia and would like to set up an office/ assembly plant in China. Could you share your experience with us?

Dear Anna,
That’s a big topic, but I would like to at least offer some basic points and give some links for where you can find more information.

Unlike 10-15 years ago where foreigner owed small/medium enterprises had limited choices in China to set up manufacturing (and almost no market entry options), these days, business people like yourself have more choices to enter China.

Back in the day it was basically set up a joint venture with a local firm or buy from a PRC supplier or maybe set up your own WOFE (wholly owned foreign entity) if you were really adventurous.

I got sick of JV’s going wrong (hard to get transparent books, avoid secret payments and protect intellectual property), so I set up some WOFE’s on my own with no local partners. It was harder at first, but now paying dividends in the long run.

Looking at the options to you today, know that contract manufacturing with Chinese partners and even with other westerners is now possible in China. Plus, WOFE’s are getting easier to set up and thus JV’s falling out of fashion. Representative Offices (RO’s) are pretty much a thing of the past due to government restrictions and inability to conduct trade.

As promised, here are some links for reference.

1. There are some excellent blogs and even free magazines out there which you can follow to stay up to speed on latest options for doing business in China.

China Law Blog
Smart China Sourcing
Silk Road International Blog
(update- Another China Blog has moved to www.ChinaSourcingInfo.org) (that’s mine)
The China Sourcer is where you can find a free magazine from the not-for-profit China Sourcing Information Center where I volunteer.

2. Contract assembly is explained PassageMaker’s assembly, inspection, and packaging webpage.

3. Should you go down the path of setting up your own office or WOFE, know that the team at Fiducia helped me with my set up and you could pick their brains on the details of business formation.

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