People who want to do business in China can first set up a smaller company, which will help you to make clear of the situation there. The following will provide some useful information about setting up small company.
Industry
China is more accessible to small business than ever before with the fast development of economy. Policies governing a single sector can vary widely from province to province, city to city, and even within different districts of the same metropolitan area, so if you want to set up a company in China, make sure you not only know the ins and outs of your particular industry on a national level but also double-check to make sure the same rules apply locally.
Location
Though Beijing, Shanghai, Guangzhou, and a handful of other seaboard hubs remain the destinations of choice for most foreign companies, they may not be the best locales for businesses on a budget. If you're looking for good deals on real estate and salaries, it's important to remember that China has close to 100 cities with a population topping 1 million -- nearly all of which are actively trying to attract foreign investment. By choosing a city that's a bit off the beaten path you'll be privy to a host of government incentives that can translate into substantial savings.
Investment Structure
Perhaps the biggest decision of all is what type of investment structure you should adopt: Joint ventures and wholly foreign-owned enterprises are the most common. For small businesses, though, the cost and amount of paperwork involved could prove a heavy burden. Forming a joint venture with a local Chinese partner is definitely the less expensive way to go.
Management
Unless you're embarking on a simple outsourcing project, experts agree that you'll want to maintain a permanent China presence. That means that you need to give serious thought to who's going to run the show.
If you're starting small, you’d better minimize expenses and still keep a knowledgeable foreign presence on the ground: Employ a local Chinese manager, but then hire a "part-time expert" to regularly visit the office, oversee operations, and act as a liaison with headquarters
Intellectual-property Protection
Though international pressure is mounting for China to crack down on rampant piracy, member companies still cited lack of intellectual-property protection as one of their businesses' biggest obstacles. To get around the problem, some manufacturers hold back core technologies or try to "black box" their operations, producing component parts in multiple locations around the country and then assembling them in a single, low-tech factory. But while you should have a clear plan for how you'll minimize your potential losses, at the outset there may be no simple, surefire means to keep the lid on your IP.
Commitment
One of the worst mistakes a business owner can make is to approach China without conviction. While it has a lot to offer a small company, the challenges involved in establishing an operating presence there will test your resolve.
However, while a carefully crafted business plan is essential, you should prepare to be flexible: In China survival often hinges on an ability to constantly adjust to the unexpected. It's a lot like running your small business now, only a lot more intense.