Top 4 Cities to Do Business in China

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THE GLOBAL ENTREPRENEUR | BUSINESS

China is an attractive market. Amidst the chaos of the Covid-19 pandemic, China still thrived economically. In the years to come, this East Asian country is going to maintain its top position as an economic hub, a strong political rival against the US, and a major player on the world stage. So many Western businesses are choosing China as the next destination to establish their global presence. But they should acknowledge the fact that doing business in China is not an easy task. 

One of the first things that business leaders take into consideration is the location to set up their business. Choosing a location is tricky. There are a lot of factors involved in the process, and the strategist must think thoroughly before making the final decision. In this article, we will provide first-time Chinese entrants and aspiring entrepreneurs with a thorough review of the best cities to establish your businesses in. 

Although objectively these cities are the most ideal to do business, you should still take your brand into account. All brands are different in one way or another, and what works for your competitors might not work for your brand. So you should always know your brand. Know what makes it unique, and choose the city that supports that uniqueness.

The top cities to do business in China are the “big 4” of China:

  • Shanghai – the most advanced and most developed city in China
  • Beijing – the capital of China
  • Guangzhou – the most industrialized city in China
  • Shenzhen – the perfect city for tech start-ups
how to do business in China

1. Shanghai

Shanghai is the first city that Western business owners think of when they consider expanding their business to China. It’s safe to say that Shanghai is the default choice when it comes to doing business in China as a foreigner. 

A few facts about Shanghai:

  • Location: in the East Coast of China
  • Area: 6,340.5 square kilometers
  • Population: approx. 27 million (2020)
  • GDP: RMB 3.82 billion (US $550 billion)

Shanghai is the economic capital of China. This city is the “showpiece” of China’s miraculous growth and its booming economy. It has the biggest harbor in the world – the Shanghai Harbor. In the past, Shanghai was only a small fishing village by the coast. Yet in the 1930s, Shanghai flourished and became the financial and cultural hub of the Asia-Pacific region. Shanghai was also once the 3rd-largest financial center of the world, only behind New York and London. Although it experienced a slowed-down growth rate in the post-WWII period, it still managed to pick up and thrive to become the driver of China’s economy. 

Nowadays, Shanghai is not without its problems. Income inequality and brain drain are one of the major issues that the Shanghai authorities are trying to address. However, we can’t deny the fact that this city is still the most attractive destination for businesses worldwide seeking to do business in China. 

Shanghai’s culture is unique. It is the most Westernized city in China. Packed with expats and foreigners, Shanghaiers are very familiar with a multicultural environment and are willing to welcome any foreigners coming to the city. As a foreigner doing business in China, you will definitely have an easy time getting used to the lifestyle of this city. 

Pros and Con of Doing Business in Shanghai

Pros of doing business in Shanghai:

  • Relatively fast, low cost of transportation
  • Great public transportation
  • Truly vibrant city life
  • High-quality workers 
  • Highly Westernized
  • Good infrastructure
  • Have large communities of expats

Cons of doing business in Shanghai:

  • Bad environment (smog, poor waste management, etc.)
  • Weak legal enforcement, which leads to a high frequency of scam
  • Slow Internet, and there is a high level of censorship, which is quite normal in China
  • Hygiene problems

2. Beijing

how to choose the location for your business in China Beijing

Beijing is the capital city of China. When speaking of Beijing, people tend to think of it as more of a cultural hub than an economic hub. Beijing is highly developed, but its main attractions are the historical sites. Millions of tourists come to Beijing to see the Great Wall, the Forbidden City, the Temple of Heaven, and more. It also has many prestigious universities, the most notable one being the Tsinghua University.  

A few facts about Beijing:

  • Location: Northern China
  • Area: 16,410.5 square kilometers
  • Population: approx. 21 million (2020) – the most populous capital city in the world

Being the leading center for culture, education, diplomacy, science, and politics, it is not hard to understand why this city attracts so many foreigners to come here and establish their business. However, when doing business in Beijing, make sure that you understand and incorporate Chinese cultural values into your business activities and even strategy. It is one of the oldest cities in the world, with a rich history dating back to the early days of humanity. 

Pros and Cons of Doing Business in Beijing

Pros of doing business in Beijing:

  • Lower rental cost compared to other major cities
  • Easy international travel as there are many Embassies/Consulates
  • Friendly locals
  • Many tourist destinations

Cons of doing business in Beijing:

  • A lot of cultural understanding might be needed
  • Terrible environment and pollution
  • The weather might take a while to get used to as a Westerner
  • Low Internet connection
  • Bad transportation system

3. Guangzhou

Guangzhou is the economic hub of the Pearl River Delta. Being one of the leading commercial and manufacturing centers, Guangzhou is always a good option for foreign businesses looking to do business in China. It is highly developed technologically, and there is not much Chinese culture left in this city, unlike Beijing, where daily life is infused with the traditions and customs of China. Guangzhou is also located near Hong Kong, another fascinating business destination that foreign businesses should take into consideration.

A few facts about Guangzhou:

  • Location: Southern China, North of Hong Kong and Macau
  • Area: 7,434 square kilometers
  • Population: approx. 15 million (2020) 

As mentioned above, Guangzhou is highly developed, and there are not many tourist destinations to explore. It is located in a region much more suited for business and commercial activities, not for “fun” activities. Many Chinese even describe Guangzhou as “industrial”, “characterless”, and even “dull”. 

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Pros and Cons of Doing Business in Guangzhou

top cities to do business in China Guangzhou

Pros of doing business in Guangzhou:

  • Auspicious location for many types of businesses
  • Located near Shenzhen, Hong Kong, Macau, and many other economically developed regions
  • Good for tech start-ups
  • A lot of high-skilled workers
  • Fascinating Cantonese culture

Cons of doing business in Guangzhou:

  • Risk of flooding or heavy rain
  • Wet, humid weather
  • Bad pollution
  • Small English-speaking communities. 

4. Shenzhen

Frequently referred to as the Silicon Valley of China, Shenzhen is one of the fastest-growing cities in China. It is the perfect city for tech entrepreneurs. Shenzhen attracted millions of high-skilled workers from surrounding regions as well as all around the country. Approximately 400 out of the 500 largest corporations have their facilities in Shenzhen. Overall, Shenzhen is a highly developed city perfect for businesses in technology and high-end niches.

A few facts about Shenzhen:

  • Location: Southeastern China, bordering Hong Kong
  • Area: 2,050 square kilometers
  • Population: approx. 12.6 million (2021) 

Shenzhen is great for business thanks to its low tax rate. That’s not to mention the low manufacturing cost, low labor cost, and cheaper parts compared to other highly developed cities in China. It also has a huge market for electronics products. In a way, Shenzhen is the dream of all founders and entrepreneurs.

Pros and Cons of Doing Business in Shenzhen

Pros of doing business in Shenzhen:

  • Perfect for tech firms and startups
  • Near Hong Kong and Guangzhou – 2 of the most developed regions 
  • Robust manufacturing industry
  • Lower tax rates and no duty on warehousing
  • Modern and highly industrialized

Cons of doing business in Shenzhen

  • Slow Internet, despite being the biggest tech city in China
  • High risk of Intellectual Property theft

Conclusion

Most foreign businesses go for these 4 cities when they want to do business in China. However, there are tons of other factors that affect the final decision of the CEOs. It’s all up to what the city can offer to the development of the brand. The key here is to know your brand and choose the location that offers the most opportunity to grow it. 

Do you have anything to tell us about the cities mentioned above? Feel free to share your thoughts in the comments!

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