Tony Liu's Sino-Life also took great pains to become established in Chongqing. Liu was head of the Baushan Group in Taiwan, which has been providing funeral services since 1994. Having decided to enter the mainland market in 2005, he spent 12 months researching the traditions in different provinces.

He selected Chongqing in 2006, because funeral rites generally last much longer there than in other areas. Sometimes they can last three days and two nights and the longer ritual provides added opportunities for funeral companies.

A deceased man is given a final shave at the Babaoshan funeral home in Beijing. Li Wen / Xinhua

"The largest obstacle comes when you are trying to break the monopoly of a government institution and you are faced with doubts and objections," he said.

The company's proposal to establish a local funeral home received strong backing from the head of the civil affairs bureau in the municipality's Nan'an district. That factor removed the company's biggest obstacle, according to reports in Southern Weekend.

The company also offered employees two salaries: Their original salary from the funeral home and an additional salary from the company. It also had to turn over about 6.8 million yuan every year to the authorities.

Business potential

China's funeral industry has been the focus of public criticism for its excessive pricing of funeral products and confused industry standards. A recent regulation issued by the Ministry of Civil Affairs said the government will gradually expand State payment of basic funeral fees, including transportation of the corpse, preservation and cremation, from urban residents to those in rural areas and low-income groups during the next three years.

However, the lucrative side of the industry is mainly focused on funeral products and extended services.

According to the 2011 green book, many funeral homes suffer losses from providing basic services and attempt to make ends meet by selling products such as urns and wreaths.