Here’s Why Kunshan is a Prime Destination for Business in China
October 30, 2023
Doing Business in Kunshan

Doing Business in Kunshan

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Located in China’s Jiangsu Province, Kunshan is a modern city with a total population of over 1.6 million people. Kunshan has a strong history of economic development and is globally recognized as a city with exceptional promise for growth potential in the near future.

Kunshan presents itself as a land of opportunity for foreign investors seeking to do business overseas. Its strategic location, thriving industrial base, supportive policies, and commitment to innovation and sustainability, creates an environment primed for success. With the right strategic decisions and partnerships, foreign investors and businesses can thrive in this vibrant economic landscape, unlocking the full potential of Kunshan’s limitless opportunities.

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Basic Overview of Kunshan

Kunshan, home to its own set of innovative industrial parks, attracts foreign investors with a wealth of opportunities and a proven track record of economic success. Renowned as a manufacturing and technological hub, Kunshan presents a compelling proposition for those seeking to establish a foothold in the thriving Chinese market.

The city’s locational advantage attracts those looking to do business in Kunshan. Conveniently situated between Shanghai and Suzhou, Kunshan offers an array of strategic benefits courtesy of established trade links between these cities.

Kunshan’s GDP exceeded CNY 500 billion in 2022, becoming China’s first county-level city to do so. Over the last 15 years, Kunshan has boasted the title of China’s most affluent county, with its wages reaching as much as 30% higher than its less developed counterparts.

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Advantages of Doing Business in Kunshan

Attractive Investment Schemes

Kunshan’s self-built development zones are a key factor in the city’s rise to popularity amongst investors. These zones promote innovation by furnishing a host of tax of preferential tax and trade policies to encourage local and international development. The introduction of incentive schemes has continued to attract significant domestic and foreign investment since the 1980s, with many enterprises choosing to do business in Kunshan by opening hubs in the city.

Industrial Parks

For companies seeking to begin production in China, Kunshan’s network of specialist industrial parks provides manufacturing options for all sizes of operations. In 2022, Kunshan’s industrial investment reached a 5-year high of RMB 25 billion, and the city continued to welcome new businesses, with a total of 436 enterprises being recognized with the national high-tech status.

Kunshan is home to large manufacturing bases of well-known firms such as Foxconn, which is an apple supplier, and Starbucks, which has committed to making a large investment of RMB 1.5 billion to set up a manufacturing and distribution center that is based outside of the US.

Strategic location

By being situated only an hour away from Shanghai, Kunshan’s long-standing competition with nearby localities has contributed to an abundance of investment, policy incentives, and local trade parks. As more attention settles on Kunshan, the local environment of innovation and development continues to grow, to facilitate the rising business demands.

Kunshan’s Reputation

With RMB 70,600 disposable income per capita, Kunshan is the richest county-level Chinese city, and this wealth is reflected in the area’s development plans. Kunshan’s smart city development model promises to deliver a business climate of improved productivity, networking, and intelligence, via a significant scientific and technological upgrade of infrastructure.

Challenges in Kunshan

Due to Kunshan’s reputation of affluence and well-established business links, there are not many challenges for business operating in the region. However, for a number of residents there has been concerns of some major factories relocating to other regions.

Due to the size of the industrial parks, companies within them and their international links, factory owners and employees are concerned about geopolitical tensions affecting exports and output. With foreign trade at the heart of their output, foreign investors in Kunshan are subject to any fragilities in geopolitical relationships between countries with which they trade.

Kunshan Industrial Parks

Kunshan Industrial Parks are a network of essential economic zones, known for their strategic significance in the area’s trade development. These industrial parks encompass a range of trade sectors, which span manufacturing, technology, and logistics.

A notable attribute of Kunshan’s industrial parks is their dedication to fostering innovation and technological advancement. These parks have attracted a large number of domestic and foreign businesses due to their pro-business policies, modern infrastructure, and skilled workforce.

Manufacturing Sector in Kunshan

Kunshan’s manufacturing sector forms a large proportion of the city’s industrial output, with the sector contributing to around 70% of the local GDP. Manufacturing has been a cornerstone of the region’s development and continues to drive the city’s economic growth.

The city’s electronics and IT manufacturing sector attracts significant foreign investment each year, with numerous multinational corporations establishing production facilities in the region. Foxconn, a key Apple supplier, has a major production base in Kunshan, with manufacturing focused on connectors and data transmission equipment.

This concentration of electronics manufacturing has been instrumental in shaping Kunshan’s identity as a tech hub. Notable American tech companies have chosen Kunshan as a strategic location to tap into the booming Asian market, which underscores the relevance of this information for foreign investors.

Is Kunshan Experiencing a Slowdown?

While the geopolitical landscape is a concern for businesses and factories operating in Kunshan, the confidence of China’s exports and trade after covid is rebounding. Additionally, while many companies wanted to diversify supply chains across Southeast Asia, they are finding it difficult to meet the same infrastructural needs that is readily available in China. The pre-covid levels of demand have still, however, not returned.

Despite this apparent slowdown, the production of tech products in Kunshan is still important to a vast amount of consumer nations worldwide. US trade officials are committed to securing the supply chains for an array of crucial electronics, including those produced in Kunshan. Additionally, other private business commitments have signaled stability and continued growth for Kunshan, for example, Starbucks recently announced RMB 1.5 billion (around $220 million) of new investment in China with the opening of an innovation park in Kunshan.

Registering a Company in Kunshan

For investors looking to Kunshan, there are various ways to set up trade, manufacturing or consulting enterprises in the region. Depending on the nature of operations and the sector in which you would your business to operate, there are various investment vehicles available. Some of the company structures available include:

The company procedures to set up a company in Kunshan, may differ according to the type of entity selected and the nature of operations. If you are looking to register an entity in Kunshan, it is advised to consult a partner who can assist you with all the necessary procedures, to ensure you get set up fast and compliantly.

Payroll in Kunshan
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Final Thoughts

For anyone preparing to conduct business in Kunshan, it is crucial to remember that Kunshan offers more than just a gateway to the vast Chinese consumer market, it also provides world class manufacturing infrastructure as well as a platform for global expansion. Kunshan’s established infrastructure and skilled workforce furnishes an attractive environment for overseas enterprises.

Disclaimer: all articles and its related content are the property of MSA Consulting Company Limited and may not be reproduced either in part or in full without prior consent.
Doing Business in Kunshan

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