As you probably already know, China is currently the world's second-largest economy. China’s gross domestic product (GDP) has grown by 18.3 percent in the first quarter of 2021. The Economic Data shows us how strong China is this year as the growth of GDP means that a country has a trade surplus.
Aside from that, China has an exceptionally good business relationship with different countries. If you already have a business or invest in China, congratulations, you made a great decision, but if you have yet to invest in this country because you are still wondering what the benefits are. Don’t worry, we got you covered, in this article you will learn what are the benefits of investing in China.
Why is China good for investment ?
Currently, Chinese equities provide a structural investing chance where the economy is still growing and becoming more and more consumer-led, the accessibility of the markets continues to improve for foreign investors, and have a strong diversification.
According to Bloomberg, businesses from Europe are starting to increase their investment in China as this country has recovered quickly from the pandemic in 2020. It makes China become a more important source of growth and profits.
Furthermore, almost 60 percent of European enterprises plan to expand their investment in China in 2021, up to 51 percent from a year ago. According to an annual survey conducted by the European Chamber of Commerce. Around half of the 585 respondents reported profit margins in China were higher than their global average, jumping to 38 percent that were recorded in the previous year.
Aside from that, unemployment in China has fallen back to January’s pre-pandemic levels. The country has succeeded to avoid a second wave of Covid-19 and might have a strong fourth-quarter growth, when at the same time, the US and those in Europe as other major economies may experience another lockdown to prevent the spread of coronavirus.
Solid And Appreciated Economy in China
Most people want to invest their money constantly by looking for a country that has a stable as well as risk-free economy. China has made some improvements in the last few years. They provide support for economic recovery on a global scale, which attracts many foreign investors trying to open up business overseas, especially in China.
According to china-briefing.com, China is the second-largest recipient of foreign direct investment in the world in 2020 with the FDI at RMB 302.47 billion (US$46.38 billion). It represents a 39.9 percent surge over years as well as an increase of 24.8 percent compared with the same period in 2019.
FDI is the practice of beginning or investing in businesses in overseas countries, for example, if a Hongkong multinational company opens up operations in China, either opening up its own premises or partnering with a local company, that investment would be considered as a part of FDI.
Furthermore, China's currency, the yuan, has continued to strengthen since June 2020 together with China's rapid economic recovery.
How Competitive is China's Economy on the International Stage
China is the world’s 28 most competitive countries out of 140 countries ranked, according to the 2019 edition Global Competitiveness report by the World Economic Forum.
The report is created from 98 variables that are organized in twelve pillars with the most important including, institutions, product market, ICT adoption, macroeconomic stability, infrastructure, health, skills, labour market and more.
China has a very high Growth Competitiveness Index (GCI) , reaching a 79 score out of 100. CGI aims to measure the quality of the macroeconomic environment, the state of a nation's public institutions, as well as its level of technological readiness.
China The Leader In The Science And Technology Industries
For years, China has been focused on the technology and science industries. This sector has become the most profitable as well as thriving sector in this country. Many investors want to invest in these sectors, therefore they usually open small businesses and quickly become a business that has a large demand.
In addition, China also has made rapid progress in the next-generation fields such as 5G, mobile payments, e-commerce, as well as artificial intelligence.
Other countries are paying attention to the rapid rise of China's Information Technology enterprises, as they seek to protect their own domestic high-tech industries from China's increasing competitiveness.
A huge local market in china
China is a country with a large land and population as well as abundant resources. This country has always enjoyed its good condition in economy, business, politics and culture over the years.
Moreover, China has an advantage in the domestic market, especially in today’s economy where global trade and cross-border investment are starting to expand at unprecedented speed. China’s domestic market will help reduce its external impact, it also improves the nation’s influence in the international economic as well as industrial system.
China shows an enormous potential market, especially for foreign manufactured goods and services. Also, the nature and arrangement of markets in different parts of China is also greatly diverse, meaning that foreign enterprises should think carefully regarding which geographical location provides the best vantage point to target the broader China market.
Regulatory Environment For Foreign Investors in China
The new Foreign Investment Law of the People’s Republic of China (FIL) took effect on January 1, 2020. The new law aims to establish a new legal framework for the management as well as promotion of foreign investment in China.
The Implementing Regulation gives more detailed information and clarity on some of the provisions and principles that are arranged in the FIL, including:
- Needs national treatment for foreign invested enterprises (FIEs) in numerous important areas such as government funding, tax reductions and exemptions, land supply, permitting, public procurement, standards formulation, and project approvals.
- Establish the rights of FIEs to join in rule-making, standards formulation and government procurement.
In addition, with the FIL, foreign investors can enjoy preferential policies in some sectors and regions as designated by the Chinese authorities.
Before investing in China, foreign investors are advised to consider some actions regarding the FIL changes and these new regulations including, consult with company registration services about the specific systems and requirements that are being implemented in the new regime.
Stability of Chinese economy
As currently China’s economy sat in the second-largest in the world, its stability became critical to maintain and recover from the global economy amid the disadvantageous situation due to pandemic.
The pandemic has affected not only China’s GDP, but also on the labour market that affects political disturbance and social pressure.
In 2020 President Xi Jinping hosted an economic conference that involved many specialists in social and economic issues. In this conference, they discuss the stable development of the Chinese economy.
In addition, according to Scotiabank in 2021 China’s real GDP growth averaged 8.3 percent. It is supported by the recovering global economy, pent-up demand and a low base of comparison
Moreover, thanks to the huge market size, China enjoys its stability in macroeconomics. This stability allows China’s government to have a large space in performing macro-control and maintaining stable economic growth.
How to open business in China
As the number of foreign companies that want or consider opening their business in China has increased over years. Therefore, it is important that prospective companies partner with reputable companies that have experience and understanding of China.
SMEBro is a company registration service based in Hong Kong. We aim to help Hong Kong people to open business in China. We have more than ten years experience in this sector with over 900 clients feeling happy with our services.
Our passionate team has extensive experience in helping companies across various industries in Hong Kong and Asia. We also develop search and marketing strategies for leading brands starting from small to medium enterprises.
If you already have an e-commerce platform in Hong Kong or other countries and you want to expand your business in the China market. But you don't want to deal with complicated registration, SME Bro can help you set up all government requirements, bank accounts, addresses (virtual or actual), and more.
We offer you many services for your great business, including providing the most robust digital marketing strategies through the best practices of our professional teams. We help you optimize search engines, local search strategies, generate data, manage search costs, design custom web pages, SEO applications, and website development.
We not only provide you with business services, but we also host online and face-to-face business and organizational meetings to share information, create business opportunities between business owners, and even personal advice on living in the wider Bay Area.
With all the benefits of investing in China has been explained, we hope this article will help you to make the best decision for your business, and if you want to open your business in China we enjoy adapting our strategies to offer you with the best solutions for your business.