AHH thank you so much!! i'll write a full step by step so this will be long. note that there's no ultimate correct way to make genshin designs. this is only my own process ->

-
STEP ONE:

i start with tropes i like that aren't in genshin. i write ideas down in notes. this can be a full story off the bat or just a few words. i'll use my fontanian cat boy - silvius - as an example. his written concept was originally simply "pink haired cat boy." because... well. i want there to be a pink haired cat boy.

-
STEP TWO:

i always feel like my character's background needs to have references to other media. this isn't necessary and can be time consuming to piece together, but it's fun for me and genshin characters do tend to be walking references to other things.

for silvius i googled public domain stories - preferrably with ties to france. i found one set in paris ft. a cat and their deceased owner sylvia. i took the masc form of sylvia for silvius. the cat wore his owner's garter as a collar. i'll work this into the design. also, because "sylvia" is the name of the owner and not the cat, i figured it's only a fake name that silvius took from someone dear to him.

-
STEP THREE:

i also go into genshin lore to pair with the irl story ref. each character tends to rep their own little corner of the lore. if there's something that isn't in the game much yet, i'll make the character about that. for example i like the idea of the hexenzirkel witches even though we don't know too much about them yet, so silvius became a witch's cat. the only real risk is that your character might have their story debunked when canon content comes out. but there's also the chance they'll instead be validated, which is a really cool feeling.

these are ideas i wouldn't have come up with without reference. referencing existing stories works like art refs. if you're struggling with ideas it's extremely helpful.

with that done, "pink haired cat boy," is now "a witch's familiar with eye-catching pink hair. his name, sylvius, seems to hide a story much too mournful for his extravagant clothes. only his witch master knows why the cat's gaze occasionally drifts."

-
STEP FOUR:

thumbnailing. i draw super messy because this is just a concept stage. i collect art refs of existing genshin characters to search for repeat patterns. for example, genshin loves to split cloaks, coats and long hair so that they "fork" in the back. stuff like that.
refs of historically accurate clothes are preferred (and at times are a given.) which clothes i reference depends on what social class and/or job my character has. i want their clothes to make sense. silvius doesn't have a job but he LOVES the finer things, so i went with historical french noble clothes. emphasis on noble.

throw in some things you just think look nice and want to include. ofc, if you're making a character who isn't aligned with any nation, you can be loose with most of this step.

-
STEP FIVE:

i put the design next to others from the same nation and/or job. if they don't fit or look too much like someone else, i make adjustments. after that i'm done. i typically don't polish the designs to full illustrations and/or refs. but ofc if you have the time and feel like it then go crazy

THAT'S THE VERY LONG ANSWER BUT THIS IS WHAT I DO STEP BY STEP thank you for reading LMAO