China's administrative landscape can encompass four governmental tiers—National, Provincial, City, and Municipal—each empowered to set rules, levy taxes, and issue licences. As a result, investors must navigate overlapping regulations that differ by location and industry. Environmental, technology-transfer, and sector-specific policies add further complexity, making local expertise essential for smooth approvals, incentive capture, and day-to-day compliance with fiscal and operational obligations.

Since the launch of economic reforms in 1978, China has transitioned from a centrally planned system to a market-driven powerhouse, averaging near-double-digit GDP growth for more than three decades. Special Economic Zones, large-scale infrastructure projects, and an expanding middle class have fuelled continuous demand for advanced manufacturing, consumer goods, and high-value services—cementing China's position as the world's second-largest economy and a critical market for multinational expansion.

China's currency, the Renminbi (RMB or Yuan), remains on a managed-convertibility path: cross-border payments are increasingly liberalised through schemes such as the Shanghai and Shenzhen Connect and the Cross-border Interbank Payment System, yet full capital-account convertibility is pending. While the RMB was historically pegged to the US dollar, it now trades within a regulated basket, giving policymakers flexibility to balance export competitiveness, inflation control, and steady internationalisation.

Numerous Chinese companies are listed on the Hong Kong, New York and London Stock Exchanges and on the secondary markets. There are stock exchanges in Shanghai and Shenzhen. Companies listed in China have two classes of shares "A" and "B". "A" shares are quoted in RMB and are mainly restricted to local investors although some foreign investment funds can buy them. "B" shares are quoted in US dollars and are available to foreigners.

There are plans to eventually abolish the distinction. Several investment managers operate funds dedicated to Chinese stocks from Hong Kong and other financial centres and this would be the recommended channel for investors wishing exposure.

Shanghai is the financial hub of China, known for its thriving stock market and diverse banking services. With its innovative financial system, Shanghai offers access to a wide range of banking, asset management, insurance, and fintech services. The city's deep capital markets enable efficient fundraising through equity, debt, or alternative routes. The Shanghai Stock Exchange and the Shanghai Futures Exchange are major players in China's financial landscape, catering to both large-cap and growth companies. The tax regime is competitive and transparent, with corporate tax rates among the lowest in the G7. The system features a wide network of double-tax treaties, supporting cross-border investment and efficient repatriation of profits.

Over the past twenty years, China has emerged as a major manufacturing and exporting nation. Shanghai and the north are predominant in heavy industry such as steel, automobiles, ships and petrochemicals with the south is focused on electronics, garments, toys and consumer goods.

Many companies source goods from China without having any permanent presence in the count.

Often middlemen or trading companies are involved in the process. Although they will earn fees for their services they generally perform a useful function. Detailed, western-style contracts are rare and Zetland believes it is important for the following elements to be clearly agreed before a business relationship commences.

• Unambiguous specifications of the goods
• Quantities and prices
• Delivery/shipment dates
• Responsibility for warranty claims
• Payment terms

Quality control is critical and there are a number of quality assurance companies operating in China who will undertake product inspection during production and pre shipment and factory verification for overall quality standards, compliance with labour regulations, etc.

Chinese manufacturers will generally not be in a position to extend significant credit and will require payment by means of letter of credit or similar upon shipment.

Many companies sourcing goods in China will use a Hong Kong company to reinvoice the sales to the buyer. The goods may be shipped directly from China but the Hong Kong company can take a margin on everything sold. Properly structured no tax is payable in Hong Kong since there is no taxable source in the territory. Each situation is different and Zetland will be pleased to advise on what is possible (see Zetland's Guides to Offshore Operations and Hong Kong companies for further information).

Some buyers feel that conducting business through a Hong Kong company will also enhance credibility in China and may lead to more favourable business terms being negotiated. Hong Kong and China have also entered into a series of agreements called the Closer Economic Partnership Arrangements (CEPA) which give Hong Kong companies some advantages in certain industries in China. To avoid your company having to rent an office or employ staff in Hong Kong, Zetland Fiduciary Group can cost—effectively manage all functions of your Hong Kong holding company by providing incorporation and subsequent outsourcing services such as accounting, Tax , financial reporting and corporate compliance.

For more details regarding business in China, please see Zetland's Guide to Doing Business in China.