“Is it easier or more difficult to do business in China now as a Western company? What’s the reality versus common perception?”

At a recent panel discussion at GTR UK 2025, I was asked this very question. With only 30 seconds to respond at the time, here’s a fuller answer I’d like to share:

In many ways, it is becoming easier for Western companies to do business in China. For example:

• Stronger intellectual property (IP) protection: IP violation used to be number one fear for the Western clients I worked with. Compared to when China joined the WTO over two decades ago, this is becoming less a worry but more a practical prevention strategy. Foreign IP owners now find it significantly easier to enforce their rights too. Compensation for infringement is higher, and IP licensing is increasingly accepted as a viable business model.
• A more supportive regulatory environment: China has been steadily improving in this area. Notably, as of late 2024, all restrictions on foreign investment in manufacturing have been lifted and many more sectors are being listed into the “Encouraged” category. Authorities have also relaxed policies around data-sharing between multinationals’ China operations and their global headquarters.
• Lower entry costs for market testing: Not only have legally required capital thresholds been reduced to bare minimum for a new business license in most sectors, but the widespread adoption of digital tools like WeChat, DingTalk, and Zoom have allowed for real-time communication, file sharing, and even contract approvals—means companies can explore the Chinese market with fewer people on the ground and fewer costly trips.
• Improved administrative efficiency: Thanks to AI-enabled systems and the competition among cities that are all keen to attract foreign investment, setting up operations in China is far less bureaucratic. It used to take six months and 30+ stamps to establish a Wholly Foreign-Owned Enterprise (WFOE); now, in many cities, this can be done in a few weeks via one-stop multi-agency service centers.
• Wider choice of location: With expanded high-speed rail and digital infrastructure, many second- and third-tier cities now offer strong talent pools and logistical convenience—at significantly lower costs than the traditional hubs of Shanghai, Beijing, or Shenzhen. For example, we recently helped a client to locate a new manufacturing plant in Dongguan, an hour away from Shenzhen.
• Last but not least, reduced language barrier: It’s now much easier for Western businesses to communicate with local partners, suppliers, and customers. The rise of English-speaking talent—especially in urban and emerging tech hubs—has lowered the language barrier significantly (although there are still some cultural differences and nuances to overcome).

However, some challenges persist at a similar level to before:

• Non-tariff barriers: While import tariffs and license requirements have been eased since China’s entry into WTO (well, excluding the recent US-China tariff wars), some sectors—particularly healthcare, publishing, and creative industries—still face complex and opaque approval processes.
• Local regulatory inconsistencies: Implementation of national policies can vary by city. Foreign firms, especially smaller ones, may lack the local relationships and resources their Chinese counterparts have, making compliance more burdensome.
• Policy transparency: Foreign companies are often left out of consultations before new regulations are introduced. This makes it harder to adapt quickly compared to more locally embedded competitors.

In some areas, the environment has become more challenging. Some well-known foreign companies have exited China, citing reasons of geopolitical uncertainties, tariff war and worse local competition:

• Intensified domestic competition: Chinese firms are rapidly closing the gap with Western companies—often outpacing them in product localization, speed to market, and cost efficiency.
• Geopolitical tensions: Political friction between China and Western countries can lead to reputational risks, consumer backlash, or exclusion from public procurement, even when the company itself remains neutral.

While doing business in China still has its complexities, in many respects it is easier than before. For companies serious about entering or growing in this critical market, now is a compelling time to act.