From a cattle ranch in the northeast of China to a gym in Beijing, Jade Gray has been involved in his share of start-ups since arriving from New Zealand in 1996. He is therefore no stranger to China's many rules on investing in the country. 'It's a very laborious process, and there are a lot of hoops to jump through,' said Gray, who began his fifth venture, the Gung Ho Gourmet Pizza Factory delivery service, with a fellow New Zealander a year ago. China's limits on the use of its currency, the renminbi, in foreign trade and investment have been in the spotlight for the way they help Beijing manage the renminbi's exchange rate and, it is argued, tilt the direction of trade in China's favor. But when it comes to doing business in China, Gray and other experts say, China's capital controls pose only a minor irritation for foreign investors willing to do their homework. 'It's loosened up a lot in the past five to 10 years,' Gray said. China may be the world's second-largest economy after the United States, and the largest exporter, but the renminbi remains almost unheard of in international currency flows. 'There are technically very few ways for renminbi to flow out of China,' said Christopher Xing, who advises on Chinese taxes at KPMG in Hong Kong. That is because when China began opening up its economy in the 1980s, it decided against opening its currency market, to avoid the kind of money inflows and outflows that can blunt a central bank's ability to manage an economy. Perhaps the best example of the perils of an internationally convertible currency is the United States. 'The problem with the U.S. is that the U.S. dollar is not only the dollar of the U.S. economy, but the dollar of the international economy,' said Ye Xiang, a former economist at the Chinese central bank who is now co-head of a fund management firm in Hong Kong. 'So when the Fed wants to reduce interest rates and put liquidity into the U.S., liquidity will flow out and go into international markets.' While it may be many companies' dream to sell to the 1.3 billion Chinese, putting money into China to get started is a formidable hurdle. 'This is the biggest challenge in terms of setting up your business,' said Gray, who started Gung Ho with an initial investment of $400,000. A foreign company cannot convert a single dollar into renminbi -- whether to open a bank account, hire an employee or lease an office -- without first obtaining investment approval from the local branch of the Commerce Ministry. 'If you want to bring in money into China for investment purposes, you need to have a project approved by the government,' said Flora Sun, director of the China office in Shanghai of the consulting firm Brian Cave International Trade. (The process is different for investors who want to buy Chinese stocks. Once largely off limits to foreigners, China began in 2003 to allow some foreign investors to become qualified foreign institutional investors.) For businesses that want to start ventures in China, the easiest path may be to first set up a sales representative office, experts advise. But that means not being able to book any sales inside China. Another route is to set up a joint venture with a Chinese partner. The third option is to establish a wholly foreign-owned enterprise. Approval depends on whether the investment is in an industry prohibited for foreign investment, like agriculture or publishing. If the proposed investment is not restricted and less than $300 million, it can be approved by the municipal or provincial authorities. Anything larger has to go to the Commerce Ministry in Beijing. If the proposed investment is in a restricted industry, the investment limit for local approval falls to $50 million. Once the investment is approved and a business license is issued, the company has to receive approval to convert its investment into renminbi from China's State Administration of Foreign Exchange. Only after that can a foreign company open a local bank account and start spending money in China. This presents some investors with a Catch-22: they need to invest renminbi to obtain approvals but cannot until they have approval to invest. One solution, Xing said, is to open a pre-investment bank account. This allows companies to spend up to $100,000 to set up their businesses and receive investment approval. The amount spent is counted toward the venture's approved investment capital. The approved investment amount is an important number. It represents the maximum amount of capital the company can bring into China and convert into renminbi. If a foreign company wants to bring in more, the investment needs to be reapproved through largely the same process, which can take up to two months. As a result, some companies tend to apply for a larger amount of investment than they think they need, just in case, which leaves them with a surplus of cash sitting in a Chinese bank. But another strategy is to mix startup investment capital with loans from the company's owners, Xing said. The larger the investment, the more China allows the new venture to borrow. So while investors of $3 million or less can borrow only up to 30 percent of their total approved investment, those of $30 million or more can borrow up to two-thirds of their startup capital, he said. Whatever the mix, the company cannot convert any of its approved investment without proper documentation to show the bank. 'They won't allow you to convert U.S. dollars into renminbi immediately,' Ye said. Investors need to show their bank an invoice or service agreement to convert their deposits and spend them. Companies in China have to provide documentation -- an invoice and customs declarations -- to convert renminbi into foreign currency to purchase goods abroad. In recent years, China has begun a pilot program that allows banks in a number of cities and provinces to settle cross-border trades in renminbi, part of a gradual effort by China to promote the use of its currency in international trade. But the transactions have to be approved by the State Administration of Foreign Exchange, and the counterparties must be in Asia, Xing said. China also regulates how foreign companies can repatriate their profit. Companies need to make sure they have paid corporate taxes first. China then requires that they put 10 percent of their earnings into a general reserve. They can then apply to pay the remainder as dividends to their foreign owners by showing their books and a board resolution. China charges a 10-percent withholding tax on the payment, a relatively low amount in Asia, according to experts. China also charges a 10-percent withholding tax on interest payments, as well as a 5 percent business tax. But there is no tax on repayments of loan principal, which is one reason Xing says repaying shareholder loans can be more advantageous to foreign companies from a tax perspective than paying out dividends. If this seems complicated, experts say, it pales next to the complexities of China's rapidly changing business scene. 'You've got competition and consumers changing their demands and needs at an incredible rate,' Gray said. Selling pizzas topped with gourmet ingredients like grilled herbed chicken and wine-soaked black currants, Camembert cheese and fresh herbs, he said, is aimed at Beijing's increasingly affluent diners. 'There's no doing formulas,' he said of being successful in China. 'You just shoot in the dark. That's where experience comes in.' 