Nashville Business Journal - by Cynthia Yeldell Nashville Business Journal

If you're a Tennessee business looking to get into China, the Hong Kong government can help.

This week Michael Rowse, director general of investment promotion for Invest Hong Kong, spoke to the International Business Council of the Nashville Area Chamber of Commerce's about the benefits of choosing Hong Kong for a China-based operation. Rowse, a government official, travels the globe telling companies that Hong Kong is an easy place to do business and they can be up and running in less than a week.

The government has an office in New York that works with American companies. And one of its programs involves partnering companies with other businesses in their industry that already have operations in Hong Kong.

All of the services are free to businesses.

"Hong Kong is a very, very easy operating environment for businesses," Rowse says. "There is not a lot of red tape. Investing in mainland China is much more problematic."

Nashville-based companies such as Asurion and VF Imagewear Inc. have operations in Hong Kong, according to Invest Hong Kong.

Rowse says companies looking to invest in Hong Kong should do their due diligence and a have robust business plan. Investing in Hong Kong can be expensive, he says.

About 90 percent of Hong Kong's jobs are in the service sector, and there is very little manufacturing, Rowse says.

Hong Kong is also good place for companies looking to establish a regional sales office, he says.

But Hong Kong isn't the only place in China that's attractive to local investors.

Four years ago, Harold Morris, president of Morris Properties Inc. in Nashville, partnered with Dr. Qiang Wu to open a property management company in Tianjin.

Today, Morris' company manages several universities and hospitals in Tianjin providing services such as cleaning, landscaping and waste disposal. His company has 700 employees in China.

"If I knew then about the difficulties of getting started, what I know now, I may not have done it, but I just plunged ahead," Morris says.

He says he struggled to get contracts during his first two years. Then he got involved with people who were "less than honest," and that also hurt business.

But he finally turned the corner and expects to make a return on investment by the end of this year or next year.

He has hired a translator to help him communicate with his staff in China and plans to start video conferencing soon.

Morris says anyone looking to do business in China should hire a business consultant who has set up other businesses there and learn about the taxes, government and banking.

"You can make money, but you've got to work at it," Morris says. "It's not going to be handed to you."

Dr. Ming Wang, president of the Tennessee Chinese Chamber of Commerce, says any investment in China should be long-term.

Wang, who heads a large hospital company in China, described his investment in China as "a seven-digit amount."

He says investment in China can be risky because most companies lack financial transparency, and while the government encourages foreign investment, it's difficult to bring profits out of China. Cultural differences can also be a barrier.

"You can double your money or lose everything," Wang says. "You have to know all these macro factors."

The Tennessee Chinese Chamber will hold an educational forum on how to set up investment in China on Feb. 26.

John Aron, president of The Pasta Shoppe in Nashville, exports his products to countries such as Japan and Guam, and hopes to have his pasta in China by the end of the year.

He plans to eliminate risk by working with distributors who will pay for the product upfront.

"There is demand in the expatriate and local community for high-end American goods," Aron says.

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