Just came across this post about Starting an Internet Business in China, which covers some interesting things that you might not have thought about.
Go read it yourself, but I’d just like to make a comment on his first point: “Hong Kong is your friend”. He points out that you should incorporate and bank in Hong Kong. This is easier than in mainland China, but also is a known entity in China so it makes it so much easier to setup payments etc.
From my own experiences these are the things you don’t often think about if you’re coming from the US. But banking, incorporation and payments can be extremely difficult in many companies. Even more so if you’re a foreigner.
Hong Kong works under the British Common Law system and has over the last 50+ years perfected the legal structures and banking for international commerce. I’m sure that there are issues you run into as a foreigner, but they are likely to be a lot less trying than what probably could happen to you in mainland China.
This also brings me to the subject of offshore companies. If you believe the press this is all about tax evasion. However there are many reasons people use them. These may be hard to think of if you’re in a relatively well run country such as the US or Denmark.
In many cases such as the above the red tape in China is too difficult to deal with, so people incorporate offshore in Hong Kong instead. There are other cases where the local financial system is quite literally unsafe, where people have lost their money time and time again. Which is why many people from Latin America store their money offshore in Uruguay, Miami and Panama. Yes, Miami is offshore if you’re from South America.
Another great piece of advice is to avoid the temptation to undercut. This is good advice for anyone following my idea on global bootstrapping. It may be cheaper where you are but use that to your benefit and reach ramen profitability even quicker.