Exporting to China under Rudd's leadership

4. Legislation may also have a large impact on the business structure you select.

Each industry has very specific regulations and policies as well as government restrictions and incentives, some which restrict the type of company that can be formed. Though the market is becoming freer, wholly owned foreign enterprises (WOFEs) are still not permitted in all industries. It is very important to define your business correctly to ensure you do not breach legislation or restrict the options available to you.

5. Don’t neglect due diligence.

Conducting research on Chinese companies can be difficult, but this should not prevent it from happening. Though language barriers can impede your ability to find quality advice, you should not rely on information sourced from the internet alone. If you are having difficulty obtaining information on your own, seek assistance from companies such as Australian Business International Trade Services.

6. Don’t underestimate the importance of language and cultural differences.

Language will be a barrier to establishing relationships. English is not widely spoken and you need to be ready for the challenge. However, in contrast to popular opinion, Chinese people are not easy to offend. If you make an attempt to learn the language and stumble, they will appreciate your efforts more often than be offended. A good way to minimise the effects of cultural differences is to employ staff or an adviser with Chinese experience or background.

Top Tips for success

• * Focus your market entry efforts on one region or one city initially.

• * Choose the ultimate location for your China operation, considering the long and short- term business development needs for infrastructure, skilled labour, customer contact, and government incentives.

• * Clarify your industry category.

• * Identify the laws, regulations and rules governing the industry category.

• * Ensure your business case meets all local requirements from the outset as this will streamline the application and approval process.

• * Understand what business structures are allowed.

• * Explore the restrictions on investing parties.

• * Be aware of the minimum capital requirement.

• * Understand what corporate structures are allowed, especially who is permitted to be the legal representative of the entity.

• * Understand your potential tax liabilities and explore the legitimate mechanisms to reduce tax liabilities.

• * Be aware of government incentives, including tax holidays and special treaties offered by different regions.

• * Build a strategic relationship with the regional government who will be able to provide excellent advice on local policies and regulations; this may also open access to other business networks.

• * Seek professional help. China is a large and complex country with varying laws and regulations depending on the industry category and region, and this can be quite confusing for the uninitiated.

* Charisse Gray is senior business writer for NSW Business Chamber.

Fast Facts:

Capital: Beijing

Official language: Mandarin

Population: 1,314.1 million (2006)

Australia's trade relationship with China:

• * Exports to China A$22.8 billion

• * Major Australian exports for 2006-07 include iron ore, clothing, wool, copper ores and coal.

• * Exports of services to China A$3.604

• * Major Australian service exports include education-related travel and personal travel (excl travel)

China's global merchandise trade relationships:

China's principal import sources, 2006:

1. Japan 14.6%

2. Republic of Korea 11.3%

3. Taiwan 11.0%

7. Australia 2.4%

* source: DFAT