9th July 2021Choosing a Location to Set Up Your Business in China

Choosing a location is one of the first decisions that British companies must make when entering a new market. Location and a strategic site selection plan can have a major impact on the success of the business, affecting production, operation, and sales. British companies looking must take steps to ensure they have the right information before committing their time and money.


Regions with Free Trade Zones and preferential policies

Some locations offer more preferential policies to British investment based on the local economic priorities, such as the pilot free trade zones (FTZs). By far, China has established 21 FTZs, which constitutes part of China’s efforts to transform into a more innovative, service, and consumption-driven economy and the creation of sustainable and high-end manufacturing capacity to attract international businesses.

However, British investors are not suggested to make decisions solely based on preferential policies. Rather, there are multiple considerations that companies must grapple with when choosing a location, including but not limited to real estate, infrastructure, supplier and customer market, cost, operating environment, legal and regulatory environment, and human resources.

Below, we share some tips on location selection:

Establish search metrics

The most important factor in site selection is the specific needs of the enterprise, which can be refined into the enterprise’s business priorities and goals. Generally, UK businesses usually consider the below metrics during location selection:

  • Cost metrics – real estate (such as rental or purchasing cost or site and building amenities), utilities (water, gas, or power), labor costs (including social insurance);
  • Supply Chain – number of upstream and downstream enterprises, number of competitors;
  • Connectivity – major infrastructure, transportation options, ease of access to customers and suppliers;
  • Workforce – availability of skilled workers, labor productivity;
  • Legal environment – industry permit or certifications, special requirements on targeted industries; and,
  • Incentives – tax, financial supports, visa.

Analyze your shortlist

British enterprises can conduct an in-depth analysis of their search findings and choose the most suitable options based on the business priorities and goals set at the beginning.

After collating information based on the search metrics, a British business will likely get several potential options. The final step is to conduct a due diligence check on the shortlisted properties or preferred destination. This is particularly important for UK businesses entering a new region.

Given the risks, a due diligence check in advance is not a simple procedural step but serves as necessary and important measures to save investors from potential troubles.

For more information on Asia please visit Dezan Shira’s publishing subsidiary Asia Briefing, where you will find related information on:

This article was first published by Asia Briefing, which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in ChinaHong KongVietnam, Singapore, India, and Russia. Readers may write to the Head of UK and Ireland Business Development, and market entry advisor, Maria Kotova at  UK.Ireland@dezshira.com




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