Job Discussion Forums

[writpetition]

Hi!

I'm considering starting/opening an English training school in China and need advice on some of the issues listed below. I'd appreciate any info/insights and of course, advice.

1. Does one need to have a local (Chinese) partner? If yes, what should be his (the local partner's) extent of involvement/participation? If he is a minor partner/stakeholder how should he be compensated?

2. Does the training school need to use proprietary material for the teaching/training or can it use material readily available in the market? If readily available material can be used, does the school need to pay any royalties/charges etc.?

3. Is there a norm on the minimum investment required? If yes, how long does it have to be locked in? And, does it have to be all cash or can it include proprietary training material etc?

4. If one wants to start a chain of training schools, will it have to abide by a set of national rules/laws alone or will there also be individual province/city rules and regulations to follow?

5. Who (in the government or otherwise) does one have to contact to set the ball rolling (and their contact details, please, if possible)?

6. Is there anything else one needs to pay special attention to in order to take the process ahead?

7. Which cities/provinces would be the best suited for launching the training school/chain?

8. Typically, what should the tuition charges be and for how many hours of instruction?

I've asked a load of questions and don't expect one to have all the answers. But, anything by way of advice/insight would be welcome and appreciated.

Cheers!

[Zero Hero]

As regards your point (1), yes, it is a prerequisite. In reference to (6), you will need a bottomless suitcase full of 100-Yuan bank notes (though $1,000 HK notes are better) for local officials for various (undocumented) 'licenses', none of which will ever result in any form of tangible receipt. Also, multiply any estimates as to initial cost by at least a factor of ten.

I know people who have done this, and all but one have left China with their tail between their legs, usually around 5 or so million HK dollars the poorer for their experience. Starting a business like this - or indeed any business - in a country like China will simply result in your resources - and patience - being sucked dry.

[Roger]

Writpetition, you have in the recent past shared with this forum many of your cogent observations on iniquities in China's education system; now you want to lord it over others yourself???
It is your business, of course, but I only want to draw your attention to the risks involved...

First thing: if you have enough dough you can start up a school of your own, preferably a K 12. As for private training centre, i guess the answer is: foreign nationals need a Chinese partner.

Capitalisation? Don't know for sure, since this rule has been revised lately. until the end of the 1990s it used to be 500'000; now it should be down to 100'000. There is an elegant way of circumventing this rule: if your school is in the name of a Chinese then the cash injection does not need to surpass 30'000. But I am not completely sure - take these figures with some salt!

Why should you be tied to any particular book publisher or publish your own text materials? No royalties - you act as their book vendor!

But my warning concerns the market, man: where in China do you think is there enough space for a laowai competitor? CHinese hook up with EF or other world-renowned training centres, buy a franchise and chase you off their turf!
Besides, you will have to make very prudent decisions: which population segment do you wish to target? This is not a market with high future potential, contrary to appearances! in the last ten years, tutorial centres have in turn had to target self-paying adults followed by businesses (in-house training), and now they are farming out teachers to public middle-schools (in principle illegal...). What next/

Then there is the problem of rental: the rentals get hiked by 50%, 100% - you are pretty much at the mercy of your landlord!

The two authorities you need to get in touch with are: Education Bureau and the PSB. Maybe even the Labour Bureau (hiring permits!).

[william wallace]

Nothing to say.

[tofuman]

Get yourself a table and 2 folding chairs. Have a sign painted that says "Lao wai will answer stupid questions in English 25 Y/15 minutes." Be original with the sign. This is just a suggested wording.

Buy a three wheeled bike, load up your table and chairs. Go to different spots until you find one with a steady stream of clients. Park your bike some distance from your spot so the police will not confiscate it during one of their sweeps for unlicensed hawkers. Plan to lose some tables and chairs. Maybe you will be lucky and they will leave you alone.

If you choose a good spot, word will get around. You are in business with minimal start up costs, no overhead, and limited opportunities for local "partners" to rip you off, shakedowns, etc.

[writpetition]

Thank you Zero Hero, Roger, William Wallace and also Tofuman for your advice!

Perhaps you're right about the risks but that's the feather that comes with the bird.

No, Roger, I don't want to lord over anyone. It's just that i've been asked by someone who's in the training business and has done very well in the past few years to explore the possibility of training in China and other East/Southeast Asian countries. I have lived and worked in China for about three years and have loved my time there. And, if my destiny calls me to China again, I am more than willing to go - as a teacher, a trainer/administrator, a businessman and maybe even as a mendicant . It's gotta be legit, that's all!

Thank you again, for the insights, advice and 'opinions', too!

[englishgibson]

If a foreigner wishes to start any business in China on his/her own, he/she will have to have an initial investement of $ 1,000 000 American Dollars. Otherwise he/she will have to find a Chinese partner with that business registration under the Chinese partners name (maybe copartnership might be available with an investment close to the above some of money or under special cirrcumstances).
You should sign a GOOD Contract with your Chinese partner first of all and do not forget to include points of the ownership in it as well as points of the Lease Agreement between you/partner and the landlord. Use a lawyer-do not trust! Make sure you understand the Lease Agreement, which is the "key to your future success". Make sure you understand the Lease Agreement and agree with all points in it. With regards to your Contract with your partner (assuming you need one) make sure your role and your partner's role are clear and understood by both parties.
With respect to your academic material, you can use the staff on the market or you can write your own staff (lots of work and can be sold only within your company use).
There is no limit on your investment requirement, but you shall put a deposit down (governement office). It might be arround 50, 000 - 100,000 (all together).
Regarding your chain of schools question, you will have to register your name with the either provincial governent or Beijing depending on where you wish to expand to. If you are not Chinese you should know that there are different rules in different cities all over China, never mind the laws.
Start with your licensing office first to register and file your application. You will need a few names of teachers as well as the name of your principal (who should have 5 years of experience in China or BA,MA etc.)
Do pay special attention to your Contracts and cooperate with your partner, local tax office (you might not need to pay that 5% tax), lawyers, foreign affairs office and the landlord.
Your questions 7 and 8 are up to you body! Keep in mind that if your name is not on the License, you are an employee and can get screwed at any time!
I hope that my advice is good enough for you to reconcider your plans and I hope that I am not posting this too late for you to reverse your plans.
Cheers and Beers