In China, the majority of the businesses are structured as Limited Liability Companies. There are other options such as Joint Stock Companies but they are not that common. “Although some local governments had passed laws that permit foreign investors to form companies in as few as 2 weeks in their jurisdictions, it takes as long as 3 to 4 months to register a company in larger cities such as Beijing and Shanghai due to the volume the local governments need to handle,” said Robin, a Foreign Counselor in Beijing. Company registration in larger cities is a two step process that may take up to 2-3 months to consolidate the application and feasibility study reports and another month to draft corporate documentation such as bylaws and articles of association. According to Chinese law, a company can be totally foreign-owned and joint ventures with Chinese individuals or companies are not a requirement.

An opportunity missed by companies that have yet to start their investments in China is the tax-incentives that were offered to foreign investors. The tax bracket for local companies used to be 33% where foreign investors were taxed only for 15% of their profits. A recently passed tax law has unified this at 25% for both local and foreign companies. Only a few industries such as those involved in importing advanced technology still enjoy lower tax brackets.

In comparison to other countries, Turkish businesses have been very late in investing in China and there are only a few Turkish brands that already started their attempts to build recognition. Goldas, an Istanbul-based jewelry manufacturer and retailer, is already operating 3 retail stores in Shanghai and Hangzhou and is working on expanding its chain to a multiple number of stores.

It is possible to run into many foreign brands in Chinese shopping malls that are not really well-known globally but have attempted to enter this market with high quality products and a good marketing plan. Those companies have chosen to primarily enter this market instead of any other because of the consistently increasing demand in consumption and ease in establishing a brand name in the country which still has room for more brands in comparison to the size of the market.

“We are showing considerable progress lately as a country with TUSIAD opening an office in the Euro Center of Beijing and several business development organizations continuing in improving their relationships with the Chinese government and various organizations” said ZiuK, a consultant in Beijing. “However, we are still about to miss the boat as companies from many other countries have already started to dominate the market and make a strong name for themselves domestically.” There are still only a few Turkish companies that have invested in China. Of the 69 companies registered in the database of the Turkish Chamber of Commerce, most of them only have local representative offices and they are not allowed to perform commercial transactions legally.

Mr. ZiuK added that “The embassy has well-established relations with some local governments and Turkish investors can invest in those regions to benefit from these connections.” These local governments include, but are not limited to, those in Shandong and Tianjin provinces. Mr. ZiuK and his team are working on running a full-scale website where Turkish businesspeople can get information about the upcoming activities at the Consulate and have easy access to public information such as annual trading reports between the two countries and contact information of Turkish companies already doing business in China. For those Turkish companies that will invest in China, the Turkish government provides financial support as brand incentives and reimbursements for a percentage of showroom and retail store expenses. It is also relatively easy to secure short and long term rental apartments to stay at during their visit to China.

There are still vast opportunities in the western and northern provinces of China for Turkish investors that are willing to open factories and provide additional job opportunities in the region. A prime market or investment location for Turkish companies is Xinjiang; Uyghur Autonomous Region, where the dominantly Muslim population of 20 million have a Turkic background and the region is included as a priority in the most recent 5-year National Development Program. The Uyghur Autonomous Region houses multiple economic development zones such as Urumchi Economic & Technological Development Zone and ShiHezi Economic Cooperation Area. Local governments in these underdeveloped regions provide land and infrastructure at very low prices and also help with all the legal issues that can arise. Additional incentives are provided if these goods are exported. The legal formalities in these regions are processed a lot faster than larger cities and an enterprise can be formed in as few as 2 to 4 weeks.

Turkish companies can sell China value-added products, high quality branded goods, leather products, marbles, natural stones, optics and medical equipment, technologically innovative products and commodities that are not easy to find in China.

According to historic data provided by American Chamber of Commerce (“AMCHAM”) in Beijing, the safer sectors in China in terms of credit worthiness include electronic components, pharmaceuticals, chemicals, paper product manufacturers and steel suppliers. The riskier sectors include textiles, clothing, automobile part manufacturers and information technology providers. However, every company should still be evaluated on its own and according to their previous performance.

An alternative approach to forming business relationships with Chinese companies is to form joint ventures or partnerships with them in Turkey. Given Turkey’s strategic location and close proximity to European Union countries, Turkey is an ideal country for Chinese companies to invest in. China formulated a series of policies to encourage its companies to invest abroad. They offer guaranteed financing and low interest loans to companies that are willing to invest abroad. If the product that is produced by the establishment is one that China will have to import either way, the government is ready to offer additional benefits.

As the world economy is becoming more global, China is becoming a stronger player which will continue to improve its investment area in terms of financial regulations, its legal system, intellectual property protection, infrastructure and foreign trade. Those who will benefit from China’s growth will be the world suppliers who can tune in to China’s needs. It is time for Turkish companies to strongly consider entering the Chinese market and forming long-term business relationships with their counterparts. Consecutive increases in consumer consumption will make China an ideal market and a more valuable trading partner. Turkish companies should look for opportunities to form joint ventures with Chinese companies in Turkey, focus more on marketing their brand names or value-added products in China and build long-term alliances with Chinese companies.

Contact: Waskher@yahoo.com

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