Doing business in China

On the silk road to China: Doing business in Shanghai

Mark Phillips Mark Phillips

Shanghai – “Pearl of the Orient”, “Paris of the East”, has long held a place in our collective imaginations as a cosmopolitan city integral to international trade.

Shanghai has a proud history as one of Asia’s key commercial hubs. As a central stop on the Silk Road, the cosmopolitan capital of the roaring ‘20s, and now in today’s modern China – Shanghai is a mecca for expanding international businesses.

Often seen as the gateway to China, Shanghai’s history is evident as you move through the sprawling metropolis. The Huangpu River divides the city’s East and West banks. On the West side, the circa 1920s trading houses grandly line the Bund, while on the other, a futuristic Pudong New District skyline provides the visual image of commerce, development and reward that the city’s reputation has been built on.

Shanghai boasts a thriving economy and China’s second highest GDP per capita. It also offers attractive business incentives in its free trade zone. But Shanghai is by no means the only area of China open to Australian businesses seeking opportunity. Depending on the industry sector and type of business – China’s vast geography has much to offer, from the developed East coast through to the emerging economies of Western second tier cities. 

In some ways Australia has traditionally regarded China as a market for natural resources and agricultural products, or as a manufacturing and transport hub. But it’s time for a mind shift as China’s 2025 strategy – centred on economic transformation, strengthening the middle class and increasing innovation – unfolds. The China-Australia Free Trade Agreement (ChAFTA) is also a positive addition to the Australia-China trade relationship. Some likely beneficiaries of China’s 2025 strategy and the ChAFTA are: consumer product manufacturers and retailers, the finance industry, professional services and technology companies.

Comparison of Shanghai and Australia across key statistics

WeChat. We buy. We grow.

How can Australian mid-size businesses take advantage of the opportunity? By leveraging Australia’s clean and green brand image which is already strongly valued in China. Another cost-effective way to establish a consumer brand is through China’s unique social media platforms. WeChat is the largest of these, with over 450 million active users per day (60 percent of which login in at least 10 times). The platform’s popularity is easily explained as you can message friends, order food, get the latest news or pay taxes all on the same platform.

The possibilities for mid-size businesses in the retail and consumer products sector are real, with a number of e-commerce platforms offering an entry point into the Chinese consumer market without the need to open a bricks and mortar presence.

While incorporating in China can seem daunting due to complex tax schedules and regulation, Grant Thornton’s Asia Practice can guide you through all aspects of your China business planning and implementation.

Grant Thornton advises mid-size businesses in a variety of industries regarding their expansion to China and Asia more broadly. If you’d like to discover what opportunities China can bring to your growing business, contact us for a free Asia Fit workshop today.