ToolsCorp Corporation seems to be thriving in the US market. It has therefore decided to expand its market into other countries. The best markets to venture have been identified to be India and China. These two countries have almost the same demand for the products that ToolsCorp sell. Items such as lawnmowers, microwaves, power tools, and other range of products have high demand in those global markets. Setting up stations will definitely involve a lot of formalities as the trade regulations in China and India are different as compared to those of the United States. It is therefore important to do a preliminary market analysis of the two markets into which ToolsCorp Corporation intend to penetrate.
Starting a Business in India
Starting up a new business in India has been made faster by the government. First, by merging the applications for the Tax Account Number (TAN) and the Permanent Account Number (PAN), the process has been sped up (Kalra & Ahmed, 2019) . However, establishing a startup can still take weeks for the required processes to be completed. Depending on the type and size of business that is trying to establish itself, the add-on costs and fees are charged variably. Since ToolsCorp Corporation intends to supply huge markets in those countries, the process is expected to last several weeks.
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The regulations also indicate that there are various specified entry options for upcoming foreign businesses. The firm can be a limited liability company, liaison office, private limited company, branch office, or a representative office depending on its nature. However, the company’s bank account has to be different from the local ones. The new firm has to open a different account that tracks the foreign equity being brought into India through imports and exports. Limited and unlimited liability options are reserved for public and private companies. The most common option for a lot of foreign companies is the limited liability company options (Nagi, 2019) . This is because the option allows for the personal liability to be limited to the money that has not been received from the shared, or by an amount that has been determined before.
India is a really populous country. The middle-class population is also on the rise due to advancements in the industrial and trade sector. The items manufactured and sold by ToolCorp Cooperation are highly demanded by the middle and upper-class population. This means that the market size for ToolCorp Corporation in India is guaranteed to be on the rise. Such a market is certainly attractive for any such firm.
Another attractive feature about setting up the business in that country is that regulations allow for foreign citizens to hold the positions of full-time directors of an entity in India (Singh, 2019) . What’s more, partners can come from foreign nations. However, the law categorically states that one of the partners or directors has to be a citizen of India. All directors are also expected to apply for a Director Identification Number ("Requirements for doing business in India", 2018) .
Starting a Business in China
The China market has similar characteristics to that of India. The only difference is that China’s GDP is higher than that of India. This implies that there are more people in the middle class in China than in India; hence the market is broader. China’s population is also increasing at a rate similar to that of India. These features make China a good option for ToolCorp Corporation. This is because the first time a company decides to venture into foreign markets, it starts with countries that are likely to earn them high returns. China is one such foreign market especially if the products are household materials. On the legal side, the figure below indicates the various establishment options that China has for foreign investors:
Evidently, the structure above is similar to that of India ("Modes of Setting Up for Foreign Businesses - Corporate Establishment in China", 2018) . The biggest concern for ToolCorp Corporation should be competition. The market niche that the firm is trying to tap is heavily crowded in both India and China. This is due to the rapid industrialization that has been taking place over the last few years (Shi, 2019) .
The advantage of choosing the two markets is that the legal structures for foreign investors in the two countries are almost similar. For instance, companies that apply as representatives and those that apply to be Liaisons all have the same way of operating ("Is Doing Business in India More Difficult than in China? - Asia Business News", 2013) . This is the same for joint ventures and wholly foreign-owned enterprises firms that are not from the country. The only difference is that China has some establishment options that India does not. For example, there is a subcategory named “foreign-invested commercial enterprises” that has been put under Wholly Foreign-Owned Enterprises (WFOEs) in China ("10 Steps to Open a Foreign Invested Company in China - S.J. Grand", 2019) . While the registration process is expected to be smooth for ToolsCorp in both countries, the market is also expected to quickly take in the products produced by company. The profit margins are expected to rise quickly in the first business year.
References
10 Steps to Open a Foreign Invested Company in China - S.J. Grand. (2019). Retrieved 20 September 2019, from https://www.sjgrand.cn/10-steps-open-foreign-invested-company-china/
Is Doing Business in India More Difficult than in China? - Asia Business News. (2013). Retrieved 20 September 2019, from http://www.asiabriefing.com/news/2013/05/is-doing-business-in-india-more-difficult-than-in-china/
Kalra, A., & Ahmed, A. (2019). India considering relaxing foreign investment rules for several... Retrieved 20 September 2019, from https://www.reuters.com/article/us-india-economy-budget-investment/india-considering-relaxing-foreign-investment-rules-for-several-sectors-idUSKCN1U01HO
Modes of Setting Up for Foreign Businesses - Corporate Establishment in China. (2018). Retrieved 20 September 2019, from https://www.dezshira.com/library/article/corporate-establishment-in-china-modes-of-setting-up-for-foreign-businesses-7851.html
Nagi, T. (2019). Foreign investment: Compliance under RBI/FEMA. Retrieved 20 September 2019, from https://economictimes.indiatimes.com/small-biz/resources/startup-handbook/foreign-investment-compliance-under-rbi/fema/articleshow/59488429.cms
Requirements for doing business in India. (2018). Retrieved 20 September 2019, from https://www.tmf-group.com/en/news-insights/articles/2018/may/requirements-doing-business-india/
Shi, E. (2019). Thomson Reuters Practical Law. Retrieved 20 September 2019, from https://uk.practicallaw.thomsonreuters.com/1-623-4945?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1
Singh, M. (2019). India liberalizes foreign investment rules in a win for Apple – TechCrunch. Retrieved 20 September 2019, from https://techcrunch.com/2019/08/28/india-foreign-direct-investment-fdi-rules-apple/
