Five steps to opening an office in China.
- Get a lawyer
Hire law and accounting firms with offices in the U.S. and China. The Chinese government doesn't always tell companies about rule changes, and only rarely in English.
MFG.com is registered as a wholly foreign owned enterprise, which allows it to sell in China. The company also had to register with the district level Administration of Industry and Commerce, the provincial level Shanghai Foreign Investment Commission, the national Ministry of Information Industry, and the Shanghai Telecommunications Administration. It's tough to know ahead of time which agencies will require registration. Since it's hit or miss, hire a local adviser, and be prepared to wait.
The all-important chop Many Chinese agencies won't accept signatures. You need a chop, or stamp, with a company official's name in Chinese.
- Find a bank
MFG.com opted for a Chinese bank that would accept foreign capital and would let it view account information from U.S. headquarters. All MFG.com funds wired to China have to be audited by a local accountant with the proper certifications.
- Set up an HR system
Salaries are negotiated differently in China than in the U.S. Says Free: "Let's say you offer someone 80,000 renminbi a year, which would be, like, $11,000. They say, 'OK; for how many months?' You're like, 'What?' They don't really negotiate the price; they negotiate getting [for example] 16 months' salary paid in 12 months. So instead of trying to move the number, they move the months."
Countless promotions Chinese employees often expect to be promoted several times a year. Title changes are often seen as more prestigious than salary increases.
- Get an office
Harder than it sounds. To get an office, a company needs a business license. To get a business license, a company needs an office. MFG.com had to search around until it found a landlord who would agree to provide space pending MFG.com's getting a business license, which did the trick.
Naked offices In China, companies leaving an office typically must strip the space, including carpeting, lighting, and fixtures.