Why It Is So Tough to Set Up An Offshore Company in China (An Insider Analysis)

China City Skyline at Night

The meteoric rise of China as the Global Economic powerhouse has not gone unnoticed by global investors and business owners but surprisingly only a handful of big corporate giants have managed to make a foray into China’s market.  Small investors have failed spectacularly especially when they decided not to take help from professional offshore company formation specialists in China.

The disposable income of Chinese people is increasing day by day and a significant percentage of Chinese people tend to have a positive outlook towards the future and all these little things help to create an atmosphere of opulence and prosperity. Chinese are ready to loosen their purse string at every opportunity and that means there are ample opportunities for foreign investors to expand their presence in mainland China and mop up some extra cash.

On paper, China may look like the perfect paradise or the ultimate destination for your company’s business expansion plan but the reality is vastly different. You need to consult with an offshore company formation specialist because otherwise you will soon get into trouble. Things like cultural difference, bureaucratic procedures, unfamiliar tax policies etc can turn your business expansion dream into a nightmare.

Knowing the intricacies involved in Offshore Chinese company formation can make all the difference here. Here in this article, we are going to list top reasons why it is tough for a foreign investor to set up a company in China –

Chinese City Skyline

Preference of the Consumer Has Changed

The problem with most foreign investors who are trying to make an inroad into the Chinese market is that they don’t give much attention to the preferences of the Chinese people. They tend to apply the same marketing formula that they have successfully applied on other countries in China to woo the customers. But the problem is, Chinese consumers are much more diverse than it was used to be just a few years back and they now have unique set of requirements. So, you need to understand the psyche of the customers before you start promoting your product or service otherwise your all marketing activities are soon going to bite the dust.

Intellectual Property

You can spot anything in China. Fake Apple Store, fake Starbuck store, knock-off McDonalds store, you name it and China has it. That means, if your company has anything to do with Intellectual Property, you are going to face a barrage of problems. But thankfully, things have started to change in China and the Government is definitely taking some steps to stop the menace of fake products and fake brands. Even Chinese companies are also calling for stringent IP law.

Chinese City Skyline


Corruption and the lack of transparency in government procedures are the two major concerns for those foreign investors who are planning to invest in Mainland China. However, the current Chinese government is trying its best to curb corruption and has expelled several government officials on the charges of corruption. But still investors have to face numerous problems when they send their employees to get some paper works done by Chinese government officials. It is an open secret that sometimes, investors have to bribe their way in or else face the wrath of the corrupt government employees.

Law and Regulations

Bureaucracy is the numero uno concern of all the investors who are planning to set up an offshore company in Mainland China. It takes weeks, if not months, to obtain permits and licenses. The process is riddled with numerous complicated process and the lackadaisical attitude of the bureaucrats will only add to your woes.

Getting your products approved by the Chinese authority or obtaining licenses are one of those laborious tasks that can make you go crazy. There are tons of paper works involved and the process is very confusing for a foreign national.

Extreme Competition

If you are trying to disrupt the Chinese marketing with your amazing product, you will be in for a rude shock. Chinese Companies have upped their game in the last few years. Rather than imitating their western counterparts, they are focusing on innovation and catering to the diverse needs of the emerging Chinese middle-class families. Since they are local players, they will have an edge when it comes to reach out to their targeted audience. Moreover, the Chinese Government is also encouraging local business owners by rewarding them with tax cuts and other subsidies. This makes it all the more difficult for foreign investors who want to disrupt the Chinese market. You are going to face stiff competition from the local companies and therefore, you need to have a proper marketing plan up your sleeves.