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What do I need to open a language school in YN?

fixitwithahammer (165 posts) • 0

I was wondering what sort of preperation I would need to open a language training center in Yunnan. It doesn't have to be Kunming, other Yunnan cities work well with me.

-What are the regulations for foreigners to open a language school?
-What are the (business) registration fees to open a club or training center?
-What difficulties await me as a foreigner? (I have a Chinese partner)

Business plan, and all academic stuff is not a problem, I'm mostly concerned about all the legal stuff, all physical items (design, curriculum, promotion is already planned out)

I'm not planning to teach preschool kids, mostly 6 years of age and up? Which might be helpfull in terms of health certificates and other 'Baby'- stuff.

Any information or advise will be appreciated, so if you have opened a business (training center), helped setting one up, or just know about it, please share the info with me and others.

I appreciate your help.

tommann (423 posts) • 0

-What are the regulations for foreigners to open a language school?
They are many and complex. You will need a lawyer to help you.

-What are the (business) registration fees to open a club or training center?
A ton. Again, a lawyer can help. You cannot do without one.

-What difficulties await me as a foreigner? (I have a Chinese partner)
Guan xi, surviving business dinners, being taken advantage of by Chinese, etc.

fixitwithahammer (165 posts) • 0

I was aware about the tons of regulations but was hoping to get more specific information.

I talked to a lawyer friend, but he wasn't too sure about plenty of regulations and he recommended to ask friends with experience in the field.

That's why I am posting here, before I spend a lot of cash on lawyers that don't seem to be much help.

tigertiger - moderator (5080 posts) • 0

Observations.

If you have a Chinese business partner, who is not family, do not give them full access to your bank.
Do not trust lawyers unless they are connected to your family (requires a Chinese spouse).

Training centre is do-able, but a 'school' requires a special licence that you will not get. However you can operate off another schools licence, but they can want too much 'rent', perhaps 15-20% of turnover (not %of profit)
You can set up as a consultancy, the easiest way to do it. Your scope of operations must be vague as your licence will not allow anything not in your scope, e.g. you cannot do translating as an official business, unless you are qualified in China.

You can set up as a WFOE, that way you are not employed by your company, as employing foreigners requires a special licence.

You need a sum of money (100k RMB?) to lodge with a bank as registered capital. You also need to set up with the tax office. This costs money.

Every city has a Director in charge of Foreign Investment. Once you are sure you want to set up a company, go and see them. If they are below target they can (if they chose) bend over backwards to help you through the admin quagmire. Alternatively they may be the first in the line of people who want to fleece you.

Your negotiation anchor should be that you are looking at several cities in which to invest. This implies that you can easily walk away.

Remember that the business culture in China has a different focus. Everyone is cost focussed, and will haggle you down on your prices and will charge you more if they can.

People go into business for what they can take out of it (today), not what they can put into the business for tomorrow's gain. This is important to remember if you have partners, you may be struggling to feed your family, while your partner drives around in a new BMW (seen it).

In the words of Fox Mulder, 'trust no one'. Especially not partners, lawyers and accountants. Unless they are family.

Many people in quieter districts/cities teach from home unofficially, marketing is by word of mouth. If you get a visit from an official, unlikely, you can offer free classes to their kids. Or take them out to dinner and get them very drunk on Moutai (expensive baijiu).

General rule. The further from the big centres you go, the less officialdom, the more corruption, the smaller the 'gift' expected.

There are several articles on setting up business in China if you want to do it officially. Unless you want to build a brand and grow it is probably not worth it. Point to note. All the big brands are now struggling. The market is rapidly maturing. Fees are coming down and teachers pay has not gone up significantly in 10 years.

Employing people can be another nightmare, as every employee holds your reputation in their hands.

All of the problems I mentioned can be overcome, but you need to go in with your eyes wide open.

fixitwithahammer (165 posts) • 0

Tigertiger,
Thanks, that is very good and useful advise. Since my prospect location is one of the quiter areas of YN.
I think I will try to run it with the least official set up possible.

See how things go.

In the worst case I get my physical investment taken, equipment and such stuff.
I don't think I will put 100k deposit in an account just to see it disappear through some of the mentioned reasons.

If it becomes successful I can still apply for official registration, I guess.

I have one option to keep it grayzone-legal, so far that sounds best. (pretty much what you mentioned about the consultancy)
I am not trying to avoid being an official institute but, man, do I not want to get ripped off!

tommann (423 posts) • 0

fixitwithhammer, it is a tough road, but can be very rewarding financially!

EminStone (3 posts) • 0

It sometimes becomes difficult to do some things strictly to the regulations. I support your idea to start first before registering. If you feel it is not that good, maybe you can register a culture communication company at a 30 K registered capital for a company account.

fixitwithahammer (165 posts) • 0

@EminStone:
Are we talking 30K ChineseYuan?

Ao far thats the best financial solution so far, compared to the 300K RMB for startin 2 other labels, for an official (education related) business.
30k RMB would be splendid.

HFCAMPO (3062 posts) • 0

I worked in several schools and found the same problems at every language school I worked in. You get what you pay for! - You seen one you seen them all! Don't forget this - What makes your school different then any others?

I met some excellent chinese teachers and foreign teachers. However, they are already working at other schools. So how do you get them to come teach at your school. No one knows your school because it is new and chinese love tradition. They go with what they know, and they go by word of mouth. So expect to pay rent and receive very little income the first year. In other words, you will be in the red.

This is how you make your school special. I recommend you pay Chinese teachers 100 RMB per hour. There are some great teachers out there. Dont choose the pretty girls who are 22-26 years old. Use the young teachers as receptionists until you have time to observe them and let them observe experienced teachers. All receptionists must be teachers. I have met the most useless receptionists who do NOT speak simple english and who could not give me simple directions on how to get to the school. They have no clue of directions or what bus stops in front of their school. They had no idea of landmarks or cross streets.

Pay more and get the mature (Over 28) teachers with experience and knowledge. They will leave the school where they are working and come work for you. Rule #1 - don't be cheap. Treat them with respect and cherish them.

If you pay Foreign teachers 100 RMB then you are just like the rest - Cheap. Good Foreign teachers get 150 RMB per hour in most places. You want good teachers, pay them 200 RMB and they will all flock to your school. Rule #2 - Get teachers with a visa and stay away from tourists and students who only want some spending money. They do NOT care about your school and will drop you in a NY minute. This will also keep you out of trouble with the PSB office who is now giving hefty fines to schools who hire illegal foreigners (NO working visa).

If you follow these simple suggestions you can choose the best teachers. Rule #3 - NO contracts - pay them by the hour for at least 6 months until you know who is good and who is not. I seen a lot of schools give a 1 or 2 year contract to a loser and they are stuck with them.

Finally, reward your good workers. Send your good workers who are NOT english majors to other schools (as students). You pay their fee and when they come back they will be grateful and they can spy on the other school and get ideas of what is good and what teachers are good. You can then use this knowledge to improve your own school and recruit the good teachers who may not have heard about you. This will make your staff LOYAL.

The biggest mistake I have seen is lieing to your staff and paying them different wages. Nothing pisses them off more then to know they have been cheated. All schools have a policy of NOT telling others their salaries. But low and behold, someone always spills the beans and the resentment begins. All are same - chinese 100, Foreiger 200. If someone is NOT good, get rid of them but do NOT keep them and pay them less.

Remember this - Quality will get you Quantity - If you have the best teachers, you will get new students quickly and you will NOT be in the red. Most schools try to get quantity (many students) but they have NO quality (useless teachers).

You need to focus on the Product/Services you provide. Do not worry about business and profit. If you build it, they will come. Build it well and employ only the BEST teachers! I guarantee you will have people at your door.

And when you make a mistake, and you will, for God sakes, Change things and don't continue the SAME mistake. If you already hired teachers and are paying them 100, then Change it NOW.

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