Seeking non-EU international trading partners is an attractive option for firms looking to future proof income from overseas markets amid Brexit uncertainty – so could setting up in China be the answer? IoD member Tom Higgins shares his experiences of establishing an office in Shanghai
Developing software for retail foreign exchange, CFD and cryptocurrency brokers to help them reduce risk, cut costs and differentiate from competitors is the raison d’être of Gold-i. The Surrey based tech firm has grown a client list in 28 countries since its founding in 2008.
The business opened its Shanghai office, its first outside the UK, in March 2016 following extensive research and invaluable advice from the UKTI.
“Having offices in the UK and in China enables the company to operate across all time zones – a key factor in Gold-i’s international growth strategy,” says Tom Higgins, the company’s founder and CEO.
Higgins advises against trying to operate from the outside. “Having a complete Chinese offering – Chinese staff, a local office and website – will help you to gain significant loyalty from Chinese customers,” he says. “The Chinese want to meet you, come to your office and sign contracts in person.”
Doing your homework, too, is key he says – are you absolutely certain there’s an appetite for your products or services in China? If the answer is ‘yes’ then you have a couple of options: “There seem to be two routes if you want to set up in China,” he says.
“One is to become a Wholly Foreign Owned Enterprise (WFOE) in which you can operate a business in China and repatriate some of the profits.
“The other is to set up a Representative Office, where the main function is outside of China. We opted for the WFOE which is quite complex, involving about 40 different steps.
“It takes about six or seven months from when you first submit your documentation until you are granted your WFOE status.
“You can’t start recruiting people until the end of the process, and also need to have physical office space throughout the process.”
Higgins cites other significant hurdles including employment law and tax structures, government approval for website hosting and the language barrier… but points out that any competitors face the same barriers too and that the rewards can be plentiful…
“For the right business, setting up in China ahead of your competitors will give you a major advantage.”