China is Difficult and Expensive (Especially for Small Companies) and if You Think you Have a Workaround, Stop. Just Stop.

China lawyersChina does not care about your firm accomplishing business in China.

I repeat. China does not care about your firm accomplishing business in China. If you consider China is likely to lower your firm some kind of split simply because it will be employing 5 or 10 or even fifty folks, you are improper. Sure, there may perhaps be some more compact cities that will try to woo you and act like you are significant, but you are not significant in Beijing’s eyes and China just does not care. China is way extra worried about its personal citizens and about its personal bureaucrats abiding by Chinese regulation than it is about your foreign firm.

What do I signify by the higher than and why am I declaring this? I am declaring this simply because China stays a extremely challenging and highly-priced place in which to do business. It is simple and inexpensive for outsourcing your production and for outsourcing specified forms of expert services and for marketing highly-priced manufacturing unit products from your facility abroad, but for really a great deal all the things else, it is neither simple nor inexpensive. Sorry, but this is just actuality.

For most all the things else you have all sorts of matters you need to get worried about. Factors like irrespective of whether or not you need a firm. On this I urge you (heck, to the extent I have this energy, I command you) to examine Doing Business enterprise in China with Deportation or Worse Hanging More than Your Head. Now inquire you irrespective of whether you (who are possible not a China attorney and not even all that knowledgeable with China) have really produced some workaround that will allow for you to circumvent all or nearly all that helps make China so challenging and highly-priced. If your respond to is certainly, the odds are mind-boggling that you are improper and you should really preserve studying. If your respond to is no, the odds are mind-boggling that you are correct and you should really preserve studying.

I am producing this post right now simply because as China gets extra and extra legalistic and as extra and extra American and European and Australian SMEs search for to make income off China (as opposed to preserving income with China), our China attorneys are having extra and extra e-mail and mobile phone calls from organizations that want our assistance with having into China with procedures that flat out will not function from a business standpoint or just unlawful, in many cases both of those.

And the unhappy matter is that our China attorneys considerably too often hear about these schemes following a firm has used quite a few months and quite a few dollars formulating them and setting them up, only to have us inform them that there is zero issue in their possessing us draft the contract they want simply because even even though the contract (standing on your own) will function, the relaxation of the arrangement will not simply because it is unlawful or unworkable or both of those.

These requests most often involve the following:

1. A foreign firm seeking to circumvent China’s tough and highly-priced laws relating to providing application as a support (SaaS).

2. A foreign firm seeking to circumvent China’s guidelines necessitating organizations that are accomplishing business within just China to do so by their personal China entity, this kind of as a WFOE or a JV.

3. A foreign firm seeking to circumvent China’s guidelines necessitating organizations that have an worker — or nearly anything that appears to be like an worker, like what outdoors China would be viewed as an unbiased contractor — have their personal China entity, this kind of as a WFOE or a JV.

4. A foreign firm seeking to get expenditure income from Chinese buyers even even though China’s laws prohibit sending extra than $50,000 outdoors China for each calendar year and generally prohibit them from investing in actual estate abroad.

5. A foreign firm seeking to license its know-how or other IP to a Chinese firm devoid of accomplishing so by essential Chinese authorities channels.

I could go on and on with what we see, but the higher than 5 are the most widespread and in a comply with-up to this post I will go into extra depth pertaining to all 5 of these, explaining the tried function-arounds we see and explaining why they do not function and explaining what does.

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