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Business in China III: Investing

Investing in China's manufacturing sector

Jul 12, 2006

With its economy growing in an average of almost 8% every year, investing in China's manufacturing sector is attracting large number of foreign investors.

With its economy growing in average of almost 8% every year, investing in China's manufacturing sector is attracting large number of foreign investors. Manufacturing sector now ranks 4th in the world, after US, Japan and Germany.

China's fast growing domestic market, worldwide demand for Chinese goods and the cost advantage China offers to manufacturers are fueling the growth of manufacturing sector in China. For example: China has 50% share of world-wide camera market,30% of air conditioners, 25% of washing machines, 20% of refrigerators. Although low efficiency still seems to be an issue, investing in high tech products, involving latest technology do help to improve efficiency.

Following are the major areas of investment in China's manufacturing sector:

Metallurgy: With the rising demand for steel, China's crude steel production rose by 28.25% in 2005

Chemicals: Investment in the Chemical industry grew by 35.9% in year 2005.

Electronics: With China being the favored destination to make cheap electronic good, the investment in electronic manufacturing in growing, but the realized profit dropped by 4.1% in 2005

Pharmaceutical: Sale grew by 24.3% in 2005, compared to 2004

Other areas include: Petrochemical, Coal, Automobile, Light Industries, Paper Making and Textile.

So how to get started on investing in China? Here are some of the steps for a foreign investor:

Prepare a project proposal and submit it to the concerned department in the ministry for approval

After the proposal is approved, conduct a feasibility study and submit the report

Submit the contract with your local partner and the article of corporation of your enterprise to get the Approval Certificate

To encourage development of new sectors, the Chinese government offers incentive like lower tax and quicker approvals for investment in the "encouraged areas" like: innovative agricultural machinery, communications equipments, high tech industry, and those investing in the mid-west of the nation.

For more on investing in China, please visit:

China Investment FAQ

Law Regarding Investment in China

China Window

We hope that you found this article informative. Please do send your comments and suggestions.

Sources:
http://english.people.com
http://www.fdi.gov.cn
http://www.jimpinto.com
http://www.china.org

The copyright of the article Business in China III: Investing in International Trade is owned by Bhumika Ghimire. Permission to republish Business in China III: Investing in print or online must be granted by the author in writing.