Legal Factors in China Affecting Business

China enjoys its world’s second-largest economy and is continuously developing at a rapid rate.

Domestic consumption in China is expanding at a tremendous rate as the population in China has

crossed the mark of 1.4 billion. With such a huge consumer market, it lures investors from other

countries and offers them a market that comes with never-ending demand.

However, there are various legal aspects when it comes to doing business in China.

International companies planning to set their business in China have to deal with various legal

factors that affect their business and operating activities. Here are some of the legal factors in

China that affect international companies.

Form of Representation

If you are a U.S citizen and want to establish a business in China, you must fill up a Form of

Representation before setting up a distribution channel. This form requires an international firm

to enter details regarding the target audience and nature of the products or services. If you wish

to set your distribution channel, you must have a permit from China’s regulating authorities

which could be a time-consuming process. However, taking help from local bodies, in that case,

might help you. Depending on the modus-operandi, there could be tax-related consequences that

must be taken care of beforehand.

Taking Registration and License

Certain products require a license and prior registration before disturbing them into the consumer

market. Most of them include products that are concerned with public healthcare and are

potentially hazardous for humans. These products require a certain license or certification that

allows a company to use them directly or as a raw product. It is advised to read and understand

all the guidelines related to licensing part in China before planning to set a business.

Intellectual Property Rights

The controversies in China related to Intellectual Property Rights are known to all. China has a

strict policy that aims at protecting the interests of local companies and vendors. Hence, you

must make sure if the intellectual property rights of your company would matter to you or would

have a significant impact on your company’s growth and performance.

Tax and Import Duties

The taxation policies in China are stringent and might affect your revenues if not planned

properly. For instance, revenue generated during a licensing agreement is subject to tax in China.

Similarly, a U.S company might get relief under U.S tax law after paying Income Tax in China.

However, the same law does not have provisions for the business tax.

These legal factors can result in many hurdles for an international company. Ipopang can help

you set your business in China by complying with all the legal factors and making an easy path

for you.

To know more, you can visit here: Franchise Opportunities In China