In China, speedily fluctuating demographics, growing incomes, amplified consumer spending and an increasingly open business environment have all helped to make the Chinese market increasingly striking to Western businesses across a variety of industries. Similarly, deteriorating sales in their home markets has forced many US and European companies to relocate China firmly to the Centre of their long-term global growth strategies. (Hedley, 2013) China has tremendous potential in the manufacturing sector.
European and North American investors although, need to realize that China is not a homogenous market. The volatility levels may become an issue while performing business operations. Appearance in China Men prefer conservative suits having subtle designs. High heels and short sleeved blouses are considered as a taboo. The Chinese frown on women who tend to show off. Neutrality and subtleness is preferred in clothing for both sexes. Casual clothing is mandatorily traditional as well. Jeans are considered unacceptable for business meetings.
Women revealing clothing is taken as an offense by Chinese businessmen. Behavior & Manners in China Hand movements are considered to be distractions to the host. A man must avoid personal contact with a woman in public. Gifting an individual is something that the Chinese are very delicate about. The most favorable gifts are high quality pens. Clocks, handkerchiefs, straw sandals and anything white, blue or black are associated with death and should not be given as gifts. Punctuality is crucial, especially for a guest.
Business matters must not be discussed at meals. The host must always initiate the meal. Tasting each and every dish offered is considered as cultural courtesy. Chopsticks should never be dropped while eating, as it is considered as a bad omen. Females do not drink at meals in China. Emptying the plate while having food will give the Chinese an impression that the person is still hungry for more food. Communications in China The Chinese normally greet by bowing or nodding. Waiting for the Chinese to offer a handshake is the best procedure.
The Chinese must be allowed to leave the meeting place first. Presenting and receiving of cards must be done with both hands. Rank and status are factors highly valued by the Chinese. People in China are generally of a reflective personality and thus have relatively slow decision making capabilities. (China Business Etiquette, Culture, & Manners) Possible barriers that toy manufacturers from Europe and North America will need to consider There will be a lot of time and capital investment required in order to initiate the business in various provinces.
Regulatory bodies in China operate in such a manner, that it becomes difficult to predict the changes that take place before they happen. The regulatory environment in China is comparatively transparent. Persuading the Chinese consumers to shift from their hometown branded toy products, and purchase the industry products instead. The market share controlled by existing toy manufacturers in China will play a detrimental role in the market entry. Licensing agreements will have to be formed, depending upon the location of launching the product.
Competition from local and international toy-manufacturing companies will become increasingly fierce. Cultural, religious and traditional factors related to the particular toy product will be of extreme significance while designing the product to be launched. Variations in different provinces regarding the population, economic growth rates, average income levels, GDP per capita and consumer buying trends play an important role in determining the proper location to introduce the business. Government regulations and policies related must be thoroughly understood, before launching the product in the country.
For example, the foreign investment catalogue must be viewed beforehand. Issues related to set-up costs, incubation period and intellectual property rights may come into picture. The Chinese often take an enormous amount of time to negotiate a particular deal. It takes 18 procedures and 65 days to establish a foreign-owned limited liability company (LLC) in Shanghai, China. This is slower than the IAB global average but in line with the IAB regional average for East Asia and the Pacific. Five procedures are required exclusively of foreign companies.
(The World Bank) The incorporation documents of the parent company must be notarized by a local notary and authenticated by a Chinese consulate in the country of origin. Foreign investors must submit their applications, along with feasibility studies and charters of association, to the Foreign Investment Commission (under the district government for foreign investment approval) after obtaining a company name pre-registration. This step usually takes 14 days between the date of receiving and date of acceptance of the documents.
Foreign companies that wish to engage in international trade must also get customs registration certificates and foreign trade licenses, which can take on average 13 days. In addition, foreign companies must obtain a financial certificate for enterprises with foreign investment as well as a foreign exchange registration certificate, which usually takes a day to obtain (but can vary significantly from several hours to several weeks). Company registration documents are available online, although submissions may not yet be made online.
Foreign companies wishing to maintain bank accounts in foreign currency need the approval of the State Administration of Foreign Exchange, which takes on average 4 days. The minimum paid-in capital requirement for an LLC is CNY 30,000 (~$4,390). Chinese law allows for deposit of the capital contribution in installments, provided that the first payment is no less than 15% of the registered capital. The balance of the registered capital must be paid within 2 years of the issuance of the business license.