According to the World Bank, China now boasts a Gross Domestic Product (GDP) of $9.24 trillion, which is second only to the $16.8 trillion GDP of the United States. And while China’s annual economic growth has slowed from double digits to 7.4 percent, that rate is far better than the -2.9 percent growth (i.e. decline) of the U.S. for the first quarter of 2014. It is therefore no wonder that more and more U.S. companies are seeking to tap into China’s burgeoning market and its enormous customer base of 1.357 billion people.
There are, of course, many different means for expanding one’s business into China, and finding the best option requires a thorough risk-reward analysis. For some American businesses, the best course may simply be to enter into a contract for the export, sale, or manufacture of goods, but other U.S. companies are choosing to actually move their operations into China — perhaps by opening a wholly foreign owned enterprise (WFOE), or by forming a joint venture.