Eastern Promise - a Guide for Retailers on Expansion in China

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This presentation offers retailers a summary of the main legal and associated issues presented by expansion into China, and practical advice as to how best to deal with them.

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  • Introduction of the key messages? Or some catchphrases from the flyer? Report: Identifies the drivers; spots the “winners” Detailed sector analysis: Offices, retail, logistics, business parks, hotels China50 interactive microsite : with an interactive map and ‘cobwebs’
  • A continental-sized market of global scale Economy of US$2.8 trillion , comparable to Germany World’s fifth largest economy if it were a single entity 12% of global growth over the next decade Home to 370 million consumers , with rising disposable incomes Over 100 million square metres of prime offices and retail built over the remainder of the decade The world’s 10 fastest growing cities are all in the China50 Full executive summery list (short): Jones Lang LaSalle highlights 50 secondary and tertiary cities across mainland China The China50 represents a continental-sized market of global scale The pace of commercial real estate activity is remarkable. A new tier is emerging - tier 1.5 Chengdu has emerged as the premier China50 real estate market The balance of growth has shifted from coastal to inland and northeast cities, Some coastal cities, particularly in the Pearl River Delta, have temporarily lost ground The retail sector will provide the largest real estate opportunity in the China50, on the back of strong growth in the middle classes. Significant real estate opportunities exist in the logistics sector Office market activity within the China50 will further concentrate into Tier 1.5 cities, where stock quality is improving and demand from domestic corporations will underpin growth Strong expansion of business park space is expected on the back of demand from new high-value priority industries For international hotel operators, new opportunities are now emerging in Tier 3 cities As volumes of trade-able assets increase across the China50, institutional investor interest in commercial real estate will increase The China50 will continue to offer a compelling long term growth story, but fears of excessive risk may lead to some caution in the property market over the short to medium term.
  • Description: 2011 vs 2020 Tier 1 cities (red) China50 cities (dark grey) Rest of China (light grey) Interesting facts / analysis: Within in 9 yrs. the GDP of China as a whole will about double its GDP (from 2011 to 2020), China50 cities grow with more speed then the rest of China, these cities will increase their GDP by more than double by 2020. The 10 fastest growing large cities (by GDP) are in the China50. Chongqing is the world’s fastest growing large city. Based on current economic forecasts, the China50 will account for 12% of global economic growth over the next decade. 6% of the world’s output will be generated by the China50 by 2020. Currently (2011), China50 (dark grey) is an economy of US$2.8 trillion (GDP PPP), matching the current size of Germany. If it were a single entity, it would rank as the world’s fifth largest economy Based on current economic forecasts, the China50 will account for 12% of global economic growth over the next decade. 6% of the world’s output will be generated by the China50 by 2020.
  • All the boxes should be moved
  • More lines, move labels
  • 4 tiers in China50: new premier cities: Tier 1.5 transitional cities : these 9 cities have moved faster in the last 3 years, than the rest of the China50 cities and will continue to significantly increase their commercial real estate stock in the next 3 years (Chengdu, Tianjin, Chongqing, Shenyang, Hangzhou, Suzhou, Wuhan, Dalian, and Nanjing). Tier 2 growth : these cities have a high degree of wealth and/or international connectivity, as well as strong underlying demographics to support robust retail markets and industrial diversification. All are seeing increasing commercial real estate development. They tend to have strengths in particular economic and real estate sectors (Xi’an, Qingdao, Ningbo and Wuxi). Tier 3 – Emerging: have moved into ‘lift-off’ phase, and are starting to see significant volumes of commercial real estate development. They are being targeted aggressively by retailers and hotel operators (e.g. Kunming, Harbin and Nanning). Tier 3 – Early Adopter: these cities are beginning to have success in creating commercial real estate demand from domestic and pioneering foreign companies, who are looking to establish first mover advantage. Market transparency is significantly lower than in the categories above. They are setting in place the conditions for ’lift off’ (e.g. Guiyang, Taiyuan and Urumqi). Chengdu – go west policy, Chongqing - Shenyang – regional hub for the north east Hangzhou – wealthy city in proximity to Shanghai Tianjin – industrial motor of the north Dalian – coastal boomtown Wuhan - Suzhou Nanjing
  • Not all of the consumers are spending now but when they do they will contribute greatly to China’s consumption story, we have more and more spenders coming up year after year. Starting from a small pocket of cities in the southeast, the middle class concentration spread up the coast and then into the inland cities. By 2020 large swaths of the country will be full of consumers who have considerable discretionary income. Here, we are defining middle class as individuals with income over 30,000 RMB per year, which is equal to about 81,000 RMB per household per year or RMB 6,760 per household per month. That is about a thousand US dollars. This is a cutoff point at which people start to have real discretionary income to spend on items other than the basics.
  • Description: Analysis / interesting facts: Luxury retailers continue to be the pioneers in the expansion of international retailing across the China50, serving an important role in gift exchange throughout China regardless of a city’s wealth levels. Testimony to the strength of luxury brands, some luxury retailers are now present in the majority of the China50 cities. While Tier 1.5 cities such as Chengdu, Hangzhou, Dalian and Shenyang have the highest concentrations and growth of luxury retailers, the most aggressive push is now into Tier 3 cities such as Harbin, Kunming, Wenzhou and Fuzhou . New and expanding Tier 3 destinations include Changzhou, Guiyang, Nanning and Shijiazhuang. Fast-fashion retailers, such as Zara, H&M, Uniqlo and MNG are penetrating deeper into secondary cities. We have seen a remarkable expansion of fast-fashion retailers in the last twelve months throughout the China50 as retailers follow the first generation of major shopping malls. In cities such as Chengdu, fast-fashion retailers have typically expanded from one store to three to four stores. Testimony to the confidence of fast-fashion retailers in secondary cities, Zara opened its major flagship 3,000 square metre store in Chengdu in December 2011. Big box retailers are also expanding within the China50, with Chongqing, Shenyang, Tianjin and Wuhan leading the pack. Hefei has seen fastest growth in big box retailers.
  • Description: The pyramid describes the ranking of our retail index. Analysis: First Group: Hangzhou, Chengdu and Shenyang have emerged as the pre-eminent retail markets in the China50, Second Group: followed by Tianjin, Nanjing, Wuhan and Chongqing which lead the next group. These seven cities are characterised by high levels of international retailer presence, an increasingly high quality retail stock, supported by large wealthy catchments and significant numbers in affluent households. All have populations with relatively strong propensities to spend, although in different categories, e.g. Chengdu in F&B, Shenyang and Hangzhou in apparel, while Nanjing, Wuhan and Chongqing, with their high composition of young demographics, supports fast-fashion retailers Third Group: Changsha, Xian, Zhengzhou Harbin, Xiamen, Kunming
  • Potential supply-demand imbalances: A huge building programme is underway across the China50, as these cities modernise their real estate infrastructure. Volumes of new commercial real estate (retail and offices) coming on stream over the next two to three years are significant, and it will bring much need quality stock onto the market. Based on current economic forecasts, most cities are growing at a sufficient pace to absorb much of the new supply over the medium term, but an oversupply situation is likely to emerge in some market segments, a situation that will be compounded should current economic growth forecasts fail to be met. The challenge of liquidity: A key issue facing China’s capital real estate markets is the government-induced lack of real estate liquidity. Smaller developers have been particularly hit which is forcing consolidation. For commercial owners, the pool of overseas buyers is currently thin for any product other than prime, reasonably priced, fully leased properties. Moreover domestic insurers, despite being given the green-light in 2010 to invest in real estate, have not yet entered the market in meaningful numbers, as government discourages the sector’s participation in order to prevent overheating.  The current top-down credit tightening will continue to affect the China50 real estate market over the short term. Poor real estate transparency: According to Jones Lang LaSalle’s biennial Real Estate Transparency Index, China’s secondary and tertiary cities are seeing improvements in real estate transparency, notably in the availability of market information, owing in part to the services provided by Jones Lang LaSalle (including our Real Estate Intelligence Service) and the China Real Estate Information Corporation (CRIC). Nonetheless, the operating environment across the China50 remains difficult in terms of regulatory enforcement and consistency and transaction processes. Making further progress in transparency will be a key point of differentiation for the China50; it will those cities that have good quality market information, supported by stable and consistently enforced regulations, with fair transaction processes and backed by clearly defined policies, that will have the greatest potential to succeed as international business hubs. Growth of property management: In the rush to construct a modern real estate infrastructure, many developers and owners have failed to prioritise the use of professional management expertise to maximise the value their assets, which in some cases is leading to a deterioration of performance and efficiency of the asset. Property management across the China50 is still nascent, but as the quantifiable benefits of active real estate asset management emerge, and particularly as supply competition grows, we expect to see a substantial increase in numbers of buildings in the China50 under professional management. City governance and policy shifts: Our World Winning Cities research has long highlighted the importance of effective governance and strong leadership as a primary driving force in city competitiveness. This is germane for the China50 cities, particularly given forthcoming changes in leadership at both the national and local levels, which is likely to shift cities’ priorities. For the China50, incumbent cities with higher political status, namely the municipalities (Tianjin and Chongqing) and provincial capitals, are likely fare better than the rest, as they continue to capture a greater share of investment capital and resources from central government. However, the strength to which each city’s growth momentum continues is likely to be driven by its new leading party chiefs. This presents both an opportunity and a risk, as their relative competitive edge could be enhanced by a strong well-connected leader, or eroded by other cities with stronger ties to the central government. Given the upcoming political transitions the relative ranking of cities care likely to change and a new ‘favoured’ cities will emerge due to their new political standings. Local government debt and taxation: Local government debt is poses an increasing challenge for a number of China50 cities, particularly those that have engaged in aggressive government-led infrastructure projects. Although primarily focused on the residential sector, the government is likely to experiment with different property tax policies that may eventually change how local governments receive part of their incomes. Achieving differentiation: Concerns have been raised over the homogeneous approach adopted by many city governments to urban development. In the race to create modern 21 st century economies, most cities are pursuing very similar strategies and visions, and often have the same templates for the development of their CBDs and business zones. Policy differentiation will be a key competitive advantage for a city. Vulnerability to global volatility: China’s domestic economy continues to grow rapidly, but China has not decoupled from the global economy, and its export-driven markets remain exposed to global economic volatility. Nonetheless, the large, more domestically-driven China50 cities – such as Chongqing, Wuhan and Shenyang – may prove to be more resilient to global volatility than the export-driven coastal cities of the Pearl River Delta, Yangtze River Delta and Bohai Bay regions. Real Estate Transparency Index, Mapping the World of Transparency. Jones Lang LaSalle, 2010
  • Problem of the Chinese ID card request in some province Books, newspapers or periodicals clothing and apparel pharmaceuticals petroleum products audio-visual products,
  • business-to-business (B2B) or consumer-to-consumer (C2C) Only available to a few players due to the dominance of Taobao
  • Traditional retail is similar to the online retail model
  • Establishment is no more at MOFCOM central level
  • Cash on delivery payment is the most popular
  • Cash on delivery
  • Eastern Promise - a Guide for Retailers on Expansion in China

    1. 1. Eastern PromiseA guide for retailers on expansion in ChinaAntony Gold, Head of Retail, Eversheds LLP3 July 2012
    2. 2. Topicsacro DynamicP Protectionusiness Modeleal Estate-CommerceR issues
    3. 3. Eversheds retail team• One of the largest full service law firms across Asia, Europe, the Middle East and Africa• Offer sector specific advice on the options for expansion• Extensive experience in advising regulatory environment, advertising and promotions, branding and competitionRanked in the top tier of retail practices and recommendedfor client service by Chambers and Partners every year from2006-2012
    4. 4. Global reach
    5. 5. Questions & Answers
    6. 6. Eversheds contact detailsFor further information please contact me on:Antony GoldHead of Retail+44 845 497 8204+44 776 888 3358antonygold@eversheds.comOr email: retail@eversheds.com
    7. 7. Macro dynamicsSetting the sceneNick Emmerson and Sharon Shi, Partners,Eversheds LLP
    8. 8. China in one wordUrbanisation
    9. 9. China’s urban billion
    10. 10. Setting the scene Proverbs
    11. 11. People/place Shanghai
    12. 12. Shanghai too
    13. 13. Road out west
    14. 14. Ningxia
    15. 15. Party
    16. 16. Planned economy• 12th Five Year Plan – Investment Catalogue• Economic targets – GDP growth 7% annually on average – 45m+ jobs created in urban areas – Urban registered unemployment no higher than 5% – Prices to be kept generally stable
    17. 17. 12th five year plan• Innovation• Environment and clean energy• Agriculture• Livelihood – Population to be no larger than 1.39 billion – Pension schemes to cover all rural and 357 million urban residents – Construction and renovation of 36 million apartments for low- income families – Minimum wage standard to increase by no less than 13% on average each year• Social management – Improved public service for both urban and rural residents – Better social management system for greater social harmony• Reform
    18. 18. Elephant in the roomConsumerism “We will expand the import of consumer goods to a reasonable degree and make use of the important macro-economic balancing and structure-adjusting role of imports and optimize the structure of trade payments.” Improving the comprehensive effect of imports 12th Five Year Plan
    19. 19. PowerhouseLargest manufacturing power - fifth of global manufacturing
    20. 20. Costs are soaring• Coastal provinces – Labour – Land prices – Regulations – Taxes The end of cheap China (The Economist, 10 March)
    21. 21. What will replace cheap China?5% annual rise in currencyand shipping costs+30% annual rise in wages=Cheaper to make in US thanChina (incl. shipping) by2015
    22. 22. Advantage China“But coastal China has enduring strengths, despite soaring costs.”• Booming domestic market – newly rich – “clamouring for stuff”• Productivity is up – paid more as producing more• China is huge – large and flexible work force• Sophisticated and supple supply chain
    23. 23. Inland revenue?• Chongqing• New consumer• Basic manufacturing shift• Labour not much cheaper• Extra/unexpected costs• Move up the value chain?• Innovate or slow down?
    24. 24. Proverbs• 同床异梦 Same bed, different dreams• 创业难 守业更难 To open a shop is difficult, to keep it open is the art of survival• 木秀於林 风必摧之 It is the beautiful bird that invariably gets caged• 不知则问 其惑一时 不知不问 惑其一生 He who asks a question is a fool for five minutes; he who does not ask a question remains a fool forever
    25. 25. Questions & Answers
    26. 26. Eversheds contact detailsFor further information please contact me on:Nick EmmersonPartner+44 845 497 0522+44 771 780 8430nicholasemmerson@eversheds.comSharon ShiPartner+44 845 497 0734+44 782 446 0390sharonshi@eversheds.com
    27. 27. Eastern PromiseA Guide for Retailers on Expansion inChinaBrand ProtectionBrian Clayton, Trademark Agent, Eversheds LLP
    28. 28. Brand protection in China• The Landscape for Brand Protection• What’s available?• How does it work?• What if………..
    29. 29. The landscape for brand protection• Is it very different to other jurisdictions? – basic processes are essentially the same, its how they are applied which differs• What is “China”? – Hong Kong, Macau, Taiwan all separate• Do I really need to take special steps? – yes! – need to take a look well in advance of desire to trade – take advantage of non-use period – changes are afoot – or are they?
    30. 30. What‘s available?• Registered Trade Marks• Registered Designs – 2D designs protection?• Unregistered Rights
    31. 31. How does it work?• Registration process – slow (around 12-18 months to examine) – quite rigid and inflexible – rigorous examination with very strict criteria for both absolute and relative grounds – 10 year term
    32. 32. What if…………………(1)• My mark is refused on absolute grounds – can appeal but may need to consider replacing or amending the mark; absolute grounds objections very difficult to overcome
    33. 33. What if……………………(2) • My mark is refused on relative grounds - cancellation – non-use for 3+ years - invalidation – mark should never have been registered – “bad faith” - purchase – can be expensive - all routes likely to be lengthy
    34. 34. Questions & Answers
    35. 35. Eversheds contact detailsFor further information please contact me on:Brian ClaytonTrademark Agent+44 845 497 8178+44 782 788 3609brianclayton@eversheds.com
    36. 36. Eastern PromiseA guide for retailers on expansion in China
    37. 37. Eastern PromiseA Guide for Retailers on Expansion inChinaWhich Form?Sharon Shi, Partner, Eversheds LLP
    38. 38. Update on legislation• Supplementary Provisions to the Measures for the Administration of Foreign Investment in the Commercial Industry (V) (effective from 10, April, 2012)• Circular of the Ministry of Commerce regarding Administration of the Project Approval for Foreign Investment in Online Sale and Auto-selling Machines Sale (effective from 19 August, 2010)• Measures for the Administration of Record Filing of Commercial Franchises (effective as of 1 February, 2012)• Measures for the Administration of Information Disclosure in Connection with Commercial Franchise (effective as of 1 April, 2012)
    39. 39. Changes to Regulation on ForeignInvestment in Commercial Industry• Service providers from HK or Macao that open more than 30 stores in aggregate within the territory of the mainland of China, and sell foodstuff in different varieties and brands from multiple suppliers, are entitled to run in the form of wholly foreign-owned enterprise on a trial basis, and the aforementioned business operation shall be limited only within the territory of Guangdong Province.• As to foreign investors, other than those from HK or Macao, that open more than 30 stores in aggregate within the territory of the mainland of China and sell foodstuff in different brands from different suppliers, they are only permitted to carry out the aforesaid business in the form of joint venture with their proportion of capital contribution on and below 49%.
    40. 40. Regulations on Foreign Investment onE-commerce• A foreign-invested commercial enterprise with retail in its business scope may carry out online sale without any further approval;• A foreign-invested commercial enterprise without retail in its business scope but intending to carry out online sale, shall submit the application to competent commerce authority at the provincial level for approval;• A foreign-invested enterprise which provides network services for other dealing parties by taking advantage of its own network platform, needs value-added telecommunications business licence (“ISP Licence”); while an foreign-invested enterprise which directly engages in retail by using its own network platform, shall carry out an ICP (“Internet Content Provider”) filing.
    41. 41. Forthcoming Regulations onE-commerceIn response to recent online protests and scandals involvingprominent E-commerce companies such as Alibaba, the Chinesegovernment was, as of late 2011, drafting new regulations on E-commerce that will reportedly clarify the rights andresponsibilities of the different parties involved. In addition,drafts of a comprehensive PRC telecommunications law havebeen debated for many years.
    42. 42. Updated Provisions on Commercial Franchising Record Filing Requirements 2007 Rule 2012 RuleCompetent If a franchisor carries out its franchising To emphasize that, a franchisor is alsoAuthority in activities within one province, it should entitled to file with the MOC at theCharge of conduct record filing with the provincial central level, if the competent recordCommercial counterpart of the MOC; if a franchisor filing authority fails to record itsFranchising carries out its franchising activities commercial franchise activities.Record Filing beyond one province, it should conduct record filing with the MOC at the central level.Revocation of The record filing authority may revoke 1. The record filing authority mayRecord Filing the record filing if a franchisor is revoke the record filing if a evidenced to have hidden related franchisor hides related information information or provided untrue or provides untrue information, and information. thus causes a material impact to the agreement. 2. The record filing may also be revoked on the application of the franchisor.
    43. 43. Updated Provisions on Commercial Franchising Record Filing Requirements 2007 Rule 2012 RuleRequired Just specifying that, a franchisor should A record filing will need to be changedChanges to change its record filing with the if:Original competent authority in case anyRecord Filing information recorded has been changed. a. the information of the franchisor registered with competent registry changes; b. the business resources information of the franchisor changes; or c. the details on the distribution of franchisees’ stores in China change. In addition, a franchisor is also obligated to inform the record filing authority of any conclusion, cancellation, termination and renewal of franchise agreements in the previous year by 31 March of each year.
    44. 44. Updated Provisions on Commercial Franchising Disclosure Requirements 2007 Rule 2012 RuleInformation Only the parent company and the Natural person shareholders ofwhich Needs parent company’s or the franchisor’s franchisors are covered in the scope ofto be Disclosed controlled companies fell within the “affiliated parties” of franchisors. definition of “affiliated parties”. The bankruptcy history of the franchisor Only two years of the bankruptcy or its affiliates for last five years should history of the franchisor or its affiliates be disclosed. are required. The business resources of the franchisor Only the business resources of the or its affiliates, such as the IP rights, franchisor or its affiliates related to the operation modes, should be disclosed. franchising activities are required. And the business status of existing franchisees should be disclosed. Only the material litigation or arbitration All the litigation or arbitration in in connection with the franchise during connection with the franchise during the the last five years should be disclosed. last five years should be disclosed.
    45. 45. Updated Provisions on Commercial Franchising Disclosure Requirements 2007 Rule 2012 RuleStatutory The franchisor hides information, or The franchisor hides information whichConditions on discloses untrue information. may adversely impact the performanceTermination of of the franchise agreement and causethe Franchise the purpose of such agreement to beContract unachievable, or discloses untrue information.Confidential Just specifying a franchisor may enter The statutory confidential obligation ofObligation of into confidential agreement with a franchisees has been enhanced underFranchisees franchisee 2012 rule
    46. 46. Forms for Foreign Investor engagingin retail in China1. In the Form of Foreign Invested Commercial Enterprises (EJV, CJV and WFOE) Engaging in Retail – With retail in business scope; or – With online sale in business scope (carrying out online sale only)2. Carrying out Commercial Franchising – Through its own subsidiary in China (having retail and commercial franchising in business scope is required); or – Through retailers or its distributors as agents in China
    47. 47. Challenges• Restricted products• Licensing process• E-commerce• Unlevel playing field• Third party services• Culture difference
    48. 48. Questions & Answers
    49. 49. Eversheds contact detailsFor further information please contact me on:Sharon ShiPartner+44 845 497 0734+44 782 446 0390sharonshi@eversheds.com
    50. 50. China50Fifty Real Estate Marketsthat MatterJeremy KellyGlobal ResearchJones Lang LaSalle2 July 2012
    51. 51. China 50Fifty real estate markets that matterChina30, 2007 China40, 2009 China50: Interactive Tool China50, 2012 joneslanglasalle.com/China50citiesWorld Winning Cities Research•Tracking the momentum • Spotting the City Winners•Profiling the diversity • Identifying the real estate potential 52
    52. 52. Introducing the China50The cities that will be making the headlines HEILONGJIANGChangchun NantongChangsha Ningbo HarbinChangzhou QingdaoChengdu Quanzhou Jilin ChangchunChongqing Shantou Urumqi JILINDalian Shaoxing ShenyangDongguan Shenyang XINJIANGFoshan Shijiazhuang INNER MONGOLIA HEBEI LIAONING TangshanFuzhou Suzhou Hohhot Tianjin DalianGuiyang TaiyuanHaikou Shijiazhuang Yantai Tangshan TaiyuanHangzhou Weifang Tianjin NINGXIA HEBEI Jinan Qingdao SHANXIHarbin Urumqi QINGHAI Lanzhou SHANDONG ChangzhouHefei Weifang GANSU Luoyang Xuzhou Wuxi Xi’an ZhengzhouHohhot Wenzhou ANHUI JIANGSU Nantong HENAN SuzhouJiaxing SHAANXI Nanjing Wuhan TIBET ShanghaiJilin Xiangyang Hefei Wuxi HUBEI Jiaxing Wuhan Hangzhou CHONGQINGJinan Xian Chengdu Ningbo ShaoxingJinhua Xiamen SICHUAN Chongqing ZHEJIANG JinhuaKunming Nanchang Wenzhou Xiangyang ChangshaLanzhou Xuzhou GUIZHOU HUNAN JIANGXI FUJIAN FuzhouLuoyang Yantai Guiyang Taipei QuanzhouNanchang Zhengzhou KunmingNanjing Zhongshan YUNNAN GUANGXI GUANGDONG XiamenTAIWAN Shantou DongguanNanning Zhuhai Foshan Nanning Shenzhen Hong Kong Macau Haikou Zhuhai HAINAN Zhongshan Tier 1 cities (not part of China50) Indicates levels of economic and property activity 53
    53. 53. China50 – Our Key MessagesA real estate market of global scaleAn Economic Powerhouse • 12% of ALL global economic growth over next decadeA New City Hierarchy Taking Shape • Nine Transitional ‘Tier 1.5’ cities fast-tracking to maturityBalance of Growth Tilting • From coast to inland • From Tier 1 cities to China50Retail and Logistics • Offering significant opportunities “The China50 cities are being transformed by the scale of building, infrastructure investment and their progress of economic development” 54
    54. 54. Why are China50 important?
    55. 55. Why are China50 important?A continental-sized market Economy of US$2.9 trillion 5th largest economy 370 million consumers World’s 10 fastest growing cities 12% of all global growth 6% of world’s output Over 100 million sq m of prime commercial space 56
    56. 56. China’s Expanding EconomyChina50 accounts for increasing proportion of expanding national output China 2011: US$ 11 trillion (GDP PPP) China 2020: US$ 21 trillion (GDP PPP) China50 US$6.7 trillion China50 32% Rest of China US$2.9 trillion US$7.4 trillion 26% 66% Rest of China Tier 1 cities US$12.3 trillion US$0.8 trillion 59% 7% Tier 1 cities US$1.7 trillion 8%Source: EIU, IMF, IHS Global Insight 57
    57. 57. World’s Fastest Growing Large CitiesTop 10 cities all in China50 GDP % p.a. 2010 - 2012Cities with populations over 3 millionSource: Miscellaneous 58
    58. 58. Retail Stock Evolution, 2005-2020Four-fifths of China’s modern retail stock outside Tier 1 cities by 2020 2005 61% 39% 200813.4 million sq m 45% 2011 55% 2014 E 27 million sq m 2020 E 41 million sq m 68 million sq m China50 Tier 1 137 million sq mSource: Jones Lang LaSalle Real Estate Intelligence Service 59
    59. 59. China50An Emerging Cities Hierarchy
    60. 60. China50: A Market of Significant DiversityA nation of cities emerges 61
    61. 61. China50: Evolution Curve, 2012A city hierarchy is taking shape Tier 1 Tier 1.5 – Shenzhen Transitional Tier 1.5 - 2 Tier 2 – Growth Tier 3 Tier 3 – Emerging Tier 3 – Early AdopterSource: Jones Lang LaSalle 62
    62. 62. China50 HierarchyThe tiers of real estate opportunityTier 1.5 Transitional:e.g. Chengdu, Chongqing, Tianjin, Shenyang HEILONGJIANG•Large, open diverse economies Harbin•Strong presence of MNC’s and domestic firms= Potential across all sectors Changchun Jilin Urumqi JILINTier 2 Growth: XINJIANG Shenyange.g. Xi’an, Qingdao, Changsha, Zhengzhou INNER MONGOLIA HEBEI LIAONING•Strong demographics supporting robust retail markets and industrial Hohhot Tangshan Tianjin Daliandiversification= Strengths in retail, logistics, back offices Taiyuan Shijiazhuang Yantai Weifang NINGXIA HEBEI Jinan Qingdao SHANXITier 3 Emerging: QINGHAI Lanzhou SHANDONG Changzhou Luoyang Wuxie.g. Kunming, Harbin, Changchun, Nanning GANSU Xi’an Zhengzhou Xuzhou JIANGSU Nantong•Moving towards the ‘lift-off’ phase SHAANXI HENAN ANHUI Nanjing Suzhou•Aggressively being targeted by retailers TIBET operators / hotel Xiangyang Hefei Shanghai Jiaxing= Retail, hotels Chengdu CHONGQING HUBEI Wuhan Hangzhou Ningbo Shaoxing SICHUAN Chongqing ZHEJIANG JinhuaTier 3 Early Adopter: Changsha Nanchang Wenzhoue.g. Guiyang, Urumqi, Taiyuan GUIZHOU HUNAN JIANGXI FUJIAN Guiyang Fuzhou•Target for first-mover advantage Quanzhou Taipei= Retail, hotels Kunming GUANGXI GUANGDONG Xiamen TAIWAN YUNNAN Shantou Dongguan Nanning Foshan Shenzhen Hong Kong Tier 1 cities (not part of China50) Macau Haikou Zhuhai Indicates levels of economic and property activity HAINAN Zhongshan 63
    63. 63. Tier 1.5 Transitional CitiesNine cities fast-tracking to maturity HEILONGJIANG Chengdu: China 50’s premier real estate market JILIN Chongqing: The world’s fastest growing large city Shenyang XINJIANG HEBEI LIAONING Tianjin: A key logistics and manufacturing hub, INNER MONGOLIA Beijing with aggressive financial service aspirations Tianjin Dalian Shenyang: Retail centre of Northeast China and SHANXI NINGXIA SHANDONG hub for heavy manufacturing QINGHAI Wuhan: Central China hub, with strong GANSU HENAN JIANGSU SHAANXI ANHUI educational base TIBET Nanjing Shanghai Suzhou HUBEI Hangzhou Nanjing: Historically important city, fast growing Chengdu CHONGQING Wuhan service sector, strong educational base Chongqing ZHEJIANG SICHUAN HUNAN JiANGXI Hangzhou: Affluent city and major retail hub FUJIAN GUIZHOU Taipei Suzhou: Thriving export-driven economy YUNNAN GUANGXI GUANGDONG TAIWAN Guangzhou Shenzhen Dalian: BPO and software hub, FDI magnet, Hong Kong tourist destination MacauSource: Jones Lang LaSalle HAINAN 15
    64. 64. China50 RetailA Significant Opportunity
    65. 65. The Inexorable Rise of the Middle Classes China50’s middle classes* to double in 3 years Rest of China50 233mMillions 126m Tier 1.5 Cities 66m 28m Tier 1 Cities * Population earning over $5,000 Source: EIU, 2012 66
    66. 66. Consumer class is expandingProportion of urban population with disposable income over $5,000 pa* 2020 2019 2011 2000 2018 2017 2016 2015 2014 2013 2012 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 0% 25% 50%+ Source: EIU, *constant 2005 currency terms 67
    67. 67. International RetailersMoving deep into the China50Luxury Retailers Big Box Retailers Fast Fashion RetailersLeading the way Moving deeper into China50 Significant expansion now underway Number of Stores 2009 Number of Stores 2012 Number of Stores Tier I benchmark Luxury: based on presence of Armani, Gucci, LV, Dunhill, Burberry, Cartier, Hermes Big Box: based on presence of Tesco, Carrefour, Walmart, IKEA Fast-fashion: based on presence of Zara, H&M, Uniqlo and MNG Source: Jones Lang LaSalle 68
    68. 68. China is the world’s biggest luxury market in 2012 Q1 2012 Harbin Changchun Urumuqi Shenyan g Anshan Beijing Huhhot Dalian Baotou Tianjin Shijiazhuang Yantai Taiyuan Jinan Qingdao Lanzhou Zhengzhou Xi’an Nanjing Shanghai Zhenjiang Hefei Zhangjiagang Chengdu Wuhan Ningbo Hangzhou Nantong Chongqing Nanchang Jiangyin Changsha Wenzhou Changzhou Fuzhou Guiyang Suzhou Kunming Xiamen Wuxi Guangzhou Jinhua Nanning Shenzhen Shangyu Taizhou Sanya Yiwu Source: Jones Lang LaSalle 69
    69. 69. Mass Market Retailers expanding rapidly Q2 2010 Harbin Changchun Shenyan g Anshan Beijing Dalian Tianjin Shijiazhuang Jinan Qingdao Zhengzhou Xi’an Nanjing Shanghai Changshu Changzhou Chengdu Wuhan Ningbo Hangzhou Wuxi Chongqing Shaoxing Yiwu Suzhou Changsha Wenzhou Fuzhou Guiyang Kunming Guangzhou Nanning Shenzhen Source: Jones Lang LaSalle 70
    70. 70. Mass Market Retailers expanding rapidly Q2 2011 Harbin Changchun Shenyan g Anshan Beijing Dalian Tianjin Langfang Shijiazhuang Yantai Baoding Yinchuan Taiyuan Jinan Dongying Qingdao Xuzhou Zhengzhou Xi’an Nanjing Shanghai Changshu Hefei Changzhou Chengdu Wuhan Ningbo Hangzhou Wuxi Chongqing Shaoxing Jinhua Suzhou Changsha Wenzhou Fuzhou Guiyang Kunming Xiamen Guangzhou Dongguan Nanning Shenzhen Zhuhai Source: Jones Lang LaSalle 71
    71. 71. Mass Market Retailers expanding rapidly Q1 2012 Daqing Harbin Changchun Urumuqi Shenyan g Anshan Beijing Huhhot Tangshan Dalian Baotou Tianjin Langfang Ordos Shijiazhuang Yantai Baoding Yinchuan Taiyuan Jinan Dongying Jining Qingdao Lanzhou Weifang Xuzhou Zhengzhou Linyi Xi’an Huai’an Nanjing Shanghai Changshu Mianyang Hefei Changzhou Chengdu Wuhan Ningbo Hangzhou Wuxi Chongqing Yueyang Shaoxing Nanchang Jinhua Shangyu Suzhou Luzhou Changsha Wenzhou Quzhou Ganzhou Fuzhou Nantong Guiyang Hengyang Taizhou Kunming Huizhou Xiamen Zhenjiang Guilin Guangzhou Dongguan Zhoushan Nanning Zhuji Shenzhen Zhuhai Foshan Haikou Zhongshan Source: Jones Lang LaSalle 72
    72. 72. The Retail HierarchyHangzhou, Chengdu and Shenyang top the ranks Harbin Hangzhou, Shenyang Chengdu, Shenyang Tianjin Dalian Qingdao Tianjin, Nanjing, Wuhan, Chongqing Xi’an Zhengzhou Wuxi Nanjing Suzhou Shanghai Hangzhou Qingdao, Ningbo, Dalian, Suzhou, Wuxi Chengdu Wuhan Ningbo Chongqing Changsha Taipei Kunming Xiamen Changsha, Xi’an, Zhengzhou Shenzhen Hong Kong Harbin, Xiamen, Kunming Macau Based in retailer concentration, retail stock, wealth, population Source: Jones Lang laSalle 73
    73. 73. The Next Retail Winners? Strong retail potential in many Tier 2 and 3 cities Established markets Growth marketsFuture Attraction Index Emerging markets Xuzhou Current Status Index Current Status – based on retailer concentration, prime retail stock, wealth levels and urban population Future Attraction- based on urban population and GDP growth, retailer momentum, developer activity, retail sales, wealth and disposable incomes, and numbers of affluent households. Source: Jones Lang LaSalle 74
    74. 74. China50Challenges Ahead and Conclusions
    75. 75. The Challenges AheadThe obstacles on the road to maturity Quality of real estate stock Human resources Poor real estate transparency Lack of professional property management City governance and policy shifts Homogeneous economic structures Environmental sustainability Vulnerability to global volatility 76
    76. 76. Final ObservationsA new chapter in China50 cities evolutionTraditional Forces New ForcesEmerging China Moving to Maturity•Double-digit economic growth •‘High quality’ growth•Massive infrastructure investment •Movement up the value chain•City-building and modernisation •Continued tilt of activity inland•Low cost labour Policy •Skilled human resources•Export economy induced •Domestic economy•Low tech manufacturing •High tech manufacturing and services•Basic needs consumption •Mass consumption•Scale and speed of real estate •Quality, sustainable, professionallydelivery managed, tenant-focused real estate 77
    77. 77. For more information on China50 contact:Jeremy KellyDirector, Global Research+44 (0)20 3147 1199jeremy.kelly@eu.jll.com 78
    78. 78. Questions & Answers
    79. 79. Eastern PromiseA Guide for Retailers on Expansion in ChinaThe development of E-commerce in ChinaVirginie Deslandres, Partner, Eversheds LLP
    80. 80. Growing E-Commerce• Current situation is favourable for companies seeking to develop e-commerce: – in 2011, about 203 million people participated to online shopping, 28.5% more than in 2010 – the estimated e-commerce revenue in Q1 2012 was 1.76 trillion RMB: 26% higher than Q1 2011 – high-speed internet is widely accessible in China at very low rates – online purchases are most of the time products that consumers cannot find in stores – apparels and skin-care products are the fastest growing categories• But, China e-commerce is different from USA or Europe – inception process is markedly distinct – online shoppers have different preferences and expectations
    81. 81. Encouraged by the Chinese government• Over the past ten years, internet transactions have been encouraged and supported by the Chinese Government• In September 2011, the Ministry of Commerce (MOFCOM) has published : – a list of model e-commerce enterprise – guidelines on the development of e-commerce in the 12th year plan period • creating more favourable environment • developing the entrance of foreign players• The aim is that by 2015: – e-commerce will have been adopted by 80% of the sizable enterprises – online retail will take over 5% of the total retail sales of consumer goods – China will become the largest online commerce market in the world• China urban population shopping online – 2006: less than 10% 2015: 44% expected
    82. 82. Regulations relevant to E-commerceMajor change in 2004• 2004 Administrative Measures for Foreign Investment in Commercial Sectors – major changes as foreign investors are allowed to engage in the distribution services by setting up Foreign-Invested Commercial Enterprises (FICEs) – FICE can be Wholly Foreign-Owned Enterprises (WFOEs) and are able to engage in: • commission agency business, • retailing, • wholesaling; and/or • franchising (subject to separate regulations) of imported or domestically manufactured products
    83. 83. Regulations relevant to E-commerceAugust 2010 Circular• In August 2010 MOFCOM releases a circular allowing e-commerce activities for Foreign-Invested Enterprises (FIEs) – before the circular, foreign access to online operations was restricted (one physical outlet, requirement of a value-added telecom licence, central MOFCOM approval) – no need to get further approval: • foreign-invested manufacturing enterprises can automatically sell their self-manufactured products online • FICEs already doing retail get automatic right to sell products online (extension of their retail’s activities) – New FICEs engage in e-commerce must get provincial MOFCOM Approval
    84. 84. Regulations relevant to E-commerceAugust 2010 Circular• Other requirements of August 2010 Circular – display of their business licence on the main page of the website – establish reasonable systems: • for the return and replacement of the products • to keep sales records • to protect the privacy of consumers • to protect trade secrets – no distribution of products that are prohibited by laws – obtain and special licences to distribute: • books, newspapers & periodicals • clothing and apparel • pharmaceuticals • petroleum products
    85. 85. Regulations relevant to E-commerceAuthorities in charge• Internet sector is under the primary responsibility of: – the State Internet Information Office under the State Council – the Ministry of Industry and Information Technology (MIIT)• For E-commerce the authority is also shared with: – the Ministry of Commerce (MOFCOM) – the State Administration for Industry and Commerce (SAIC) – each of the governmental department for particular types of products such as books & publications, clothing and apparel, audio-visual products, pharmaceuticals or petroleum products
    86. 86. Regulations relevant to e-commerceFor-profit and non-profit ICPs• The enforcement of August 2010 Circular is mainly subject to the Ministry of Industry and Information Technology (MIIT)’s views – e-commerce is classified as a restricted sector for foreign investment – telecom services are subject to a licensing mechanism and operators are catalogued into being either: • for-profit Internet Content Providers (ICP) which shall secure an ICP licence from MIIT • non-profit ICPs which are only required to register with MIIT for records
    87. 87. Regulations relevant to E-commerceLicence vs. simple filling• A company which set-up an online transaction platform: – to allow third parties to sell their products on its website; and – receives proceeds from its operations on such platform is categorised as a for-profit ICP and should obtain a ICP licence from the MIIT• Companies which would be qualified as a non-profit ICP and would usually be required to make an ICP filling only are: – a company which set-up an online transaction platform for its own use to sell its own products – FICEs which sell their goods through online transactions or even specialised in online sales
    88. 88. Regulations relevant to E-commerceGeographical differences• Problem of distinction between for-profit ICP and non- profit ICP by local authorities• Depending on geographical location, local communication administrations may have different perspectives: – some are following the principle that if the website owner just provides sales information or sells its own products through the website, it shall be deemed as a non-profit website – some other are simply considering that all e-commerce websites must apply for ICP licences
    89. 89. Regulations relevant to E-commerceWFOE or joint venture• Holding more than 50% of a for-profit ICP’s equity is not allowed for foreign investors – establishing a joint venture is mandatory – getting the ICP licence from MIIT implies special qualifications• For non-profit ICPs: – corresponding to a retailer selling its own products on its own website – it can be established by foreigners under the form of either: • a WFOE; or • a joint venture• The non-profit record-filing procedures are consisting about providing: – basic information of the entity and the person responsible for the web site – the website’s URL and the description of the services to be proposed – if the services are in restricted areas of business specific consents have to be obtained from the concerned authorities
    90. 90. Regulations relevant to E-commerceForthcoming regulations• The set of regulations relevant to FIEs engaged in internet and e-commerce is still not complete – no clear definition of a non-profit ICP and a for-profit ICP – sales through other channels such as mobile phones or television are not concerned by August 2010 Circular – rules related to foreign investment in internet music services and videos online are still remain unclear• In response to recent online protests and scandals involving e-commerce, the Chinese government is also currently drafting further regulations to clarify the rights and responsibilities of the parties involved• In addition, drafts of a comprehensive PRC Telecommunications Law has been debated for many years
    91. 91. Regulations relevant to consumersinterestsProtection of consumers interests• China’s has started to put in place a system of regulations for protecting consumers interests: – the PRC Product Quality Law governing quality control in respect of commodities and services – the PRC Protection of the Rights and Interests of Consumer Law governing the merchandising of commodities and services• SAIC strongly encourages customers to make complaints if they feel their rights are infringed but still encounters many difficulties to fight against fraud and fake products
    92. 92. Regulations relevant to consumersinterestsOnline IP infringement• For the first time, a circular issued in April 2011 recently clarifies the responsibilities of online shopping platforms in relation to IP rights infringements• E-commerce operators are required to – tighten the market access of business operators and commodities to be traded – establish a trademark and patent inquiry system – adopt technical means to screen information on IP rights infringement, and manufacturing and sale of knock-off and inferior products – improve information publication, identification, trading, payment making, logistics, after sale service, dispute resolution, advance compensation, process monitoring and other assurance mechanisms – establish a daily 24-hour online inspection system – investigate and eliminate hidden dangers in time – handle violations of regulations and laws – report the symptoms, trends and dangers of serious problem in timely manner
    93. 93. Getting startedChinese e-commerce platforms• China e-commerce platforms can be classified in three models: – marketplace model – online retail model – traditional retail model
    94. 94. Getting startedMarketplace model• Marketplace model connects buyers and sellers, whether it is B2B or C2C• A marketplace platform facilitate business between the two parties but has no product on its own to offer• It must have – a searchable database of information for buyers and sellers – a secured means to facilitate payment• Major China players are: Taobao.com, Paipai.com and Alibaba.com• Restrictive access for foreign investors because it must: – be a joint venture – apply for an ICP Licence
    95. 95. Getting startedOnline store in a marketplace• For foreign brands looking to enter the Chinese market, set up their online store on a network such as Taobao can prove to be: – a lower and cost efficient investment as the network handle everything: • website maintenance • delivery • payment • after sales services – easier, as there is no need to have any real knowledge of: • the online market • the logistic • the customer services; or even • e-commerce itself – much quicker than setting up its on online retail model
    96. 96. Getting startedOnline and traditional retail models• Online and traditional retail websites are: – individual websites specifically for a particular company – providing both products and channels to sell directly to end customers• Online retail model is where the company has no formal real-world storefront• Traditional retail model is where the company has physical retails outlets
    97. 97. Getting startedMOFCOM approval• Establishment of online or traditional retail companies by foreigners are now to be approved by MOFCOM at provincial level: – WFOE or joint venture – approval easier than before – increase competition between regional administrations to seeking to capture foreign investments – still relatively complicated for online retail model – easier to obtain for traditional retail model
    98. 98. Getting startedPros & cons• Online and traditional retail models: – allow the retailer to manage its own affairs – provide more independence to decide: • products • pricing • marketing • contacts with customers – are suggested for products with high brand awareness or uniqueness• But, are expensive mainly because they require: – doing domain name promotions and advertisements – having a website in Chinese language – complying with the establishment procedures – managing a IT team and a marketing team – arranging payment systems – organising products imports, delivery logistics – providing products warranty and after sales services – insure the personal data protection
    99. 99. Getting startedPlayers• Major China online retailers are: Dangdang.com and 360buy.com• In November 2011, Armani launched their own online store: – selling clothing and handbags directly to customers throughout China – allowing customers who would normally never been able to access their products due to geographical limitations – Armani being already a well-known brand from Shanghai to Urumqi
    100. 100. Issues to considerPayment methods• Most important aspects of an e-commerce success is to secure a suitable system for payment of the goods online• Local third party payments (such as Alipay or Tenpay, similar to PayPal) have been established in 1999 and covers payment by credit cards• Cash on delivery is the most popular system for Chinese online shoppers, mainly because: – buyers have a low level of trust towards online transactions – Chinese customers have a relatively low usage of credit cards• It is advisable to propose a dual payment system online: – by credit cards (for younger generations or certain products such as flight tickets, hotels, virtual products (software, music) – cash on delivery which may incur additional operational costs but allows more convenience and wider coverage
    101. 101. Issues to considerMarketing• Online advertising is playing a major role in China – advertisements on search engines (such as Baidu) – online news releases – virus marketing – posting advertisements on • community websites or discussions boards • social networks that Chinese potential buyers tend to visit to get products recommendations• Chinese consumers also pay a great attention to other customers reviews, blogs and forums: – more prolific reviewers and readers of online reviews worldwide – 40% of online shoppers are reading or posting comments (double that of the USA)
    102. 102. Conclusion• E-commerce is still an emerging market but growing at an unprecedentedly rapid rate• Any company wishing to sell in China, we would recommend going online• E-commerce laws and regulations are constantly developing and offer more and more potentialities for foreigners• When approaching the Chinese market online, it is vital to have a strong strategy and know what to aim for At Eversheds, we an give a tailor-made approach to suit requirements of foreign investor
    103. 103. Questions & Answers
    104. 104. Eversheds contact detailsFor further information please contact me on:Virginie DeslandresPartner+33 1 55 73 42 24+33 0 61 74 57 391virginiedeslandres@eversheds.com
    105. 105. Eastern PromiseA Guide for Retailers on Expansion inChinaHR issuesSharon Shi, Partner, Eversheds LLP
    106. 106. Unified and improving Labour Law• Labour Law and Labour Contract Law• Written contract and more protection on employee• Chinas first unified social insurance law• Prior to July 2011, social insurance was a collection of programs operated by local governments and mostly regulated by local regulations
    107. 107. Practical issues• Attracting the right talent, employer branding• Two contracts = double protection?• Collective contract: is it right for your business• Trade secret: can it be protected
    108. 108. Social security payments: Obligationsof Employers• Social insurance registration• Pay employer’s contribution• Withhold employee’s contribution and pay on his/ her behalf• Inform the employee regarding his/her social insurance contributions monthly
    109. 109. The "Five Funds"• Basic pension insurance• Basic medical insurance• Unemployment insurance• Work-related injury insurance• Maternity insurance
    110. 110. Contribution Rates - applicable in 2011 Shanghai Beijing Guangzhou   Employee Employer Employee Employer Employee EmployerPension 8% 22% 8% 20% 8% 12-20%Medical 2% 12% 2%+RMB3 10% 2% 8%Unemployment 1% 1.7% 0.2% 1% 1% 2%Maternity 0% 0.8% 0% 0.8% 0% 0.85%Work-related 0.5%-1.5injury 0% 0.5% 0% 0.3%-1% 0% % 10.2%+ 32.1%-32 23.35%-Total 11% 37% 11% RMB3 .8% 32.35%Ceiling for 2011monthly salarybase for 11,688 12,603 13,623 *contribution (RMB)Maximum monthly 4,046-4,13 3,181-contribution (RMB) 1,286 4,325 1,289 1,499 4 4,407*The ceiling for 2011 monthly salary base for contribution to pension fund is RMB10,890, which is threetimes of the average salary of employees of Guangdong province in 2010
    111. 111. Monthly salary base• The adjusted monthly salary base includes not only basic salary but also bonuses, benefits, etc.• However, it is capped at 300% of local average monthly salary• In 2011, the cap was RMB 11,688 in Shanghai, RMB 12,603 in Beijing and RMB 13,623 in Guangzhou
    112. 112. New legislation• Social Insurance Law (effective from 1 July 2011)• Interim Measures for the Participation in Social Insurance by Expatriates Working in China (effective from 15 October 2011) ("Interim Measures")
    113. 113. Interim measures for ExpatriatesExpatriates: non-Chinese nationals legally employed in China"Legally employed In China" means:• Employment permit for foreigner; or• Certificate of foreign expert; or• Certificate of permanent foreign correspondent; and• Residence certificates for foreigners; or• Permanent residence certificate for foreigners and lawfully being employed in China
    114. 114. Expatriate enjoyment of benefitsIf an expatriate leaves China before retirementage, he or she may elect:3.to be refunded part of the pension fund (i.e. “theamount of individual account”); or4.to put the individual account on hold and continuecontributing when he or she returns to China
    115. 115. Expatriate enjoyment of benefits• If an expatriate leaves China after retirement age, he or she may continue to collect a pension by submitting proof of survivorship annually to social insurance agencies, or appearing at the social insurance agencies to prove his/her existence• The balance of the individual account may be inherited• The same principle applies to other social insurance payments that might be made to an expatriate after he or she has left China
    116. 116. Treaty exceptions• If there is a treaty between China and the expatriates home country on social insurance payment obligations, treaty terms will prevail• Currently, only Germany and South Korea have a social insurance treaty with China• Now that the Interim Measures are in place, more treaties are expected
    117. 117. Consequences of Non-Compliance• Penalty for non-registration: – Fines for the employer (100% to 300% of outstanding amount) – Fines for the employer’s management (RMB 500 to RMB 3,000)• Penalty for late payment/insufficient contribution: – 0.05% accrued on a daily basis – 100% to 300% of the outstanding amount
    118. 118. Consequences of Non-Compliance• Notify banks to transfer unpaid contributions (with administrative order)• Request employer to provide guarantee and sign agreement for delayed payment• Seize the assets and auction the assets (with court order)
    119. 119. Challenges• How to comply with the different local practices?• How expatriates enjoy the unemployment/medical insurance?• Can expatriate’s account be transferable across pooling regions?• Difficulties in practice
    120. 120. Questions & Answers
    121. 121. Eversheds contact detailsFor further information please contact me on:Sharon ShiPartner+44 845 497 0734+44 782 446 0390sharonshi@eversheds.com
    122. 122. Eastern PromiseA guide for retailers on expansion in ChinaClose and lunch
    123. 123. Questions & Answers
    124. 124. Eversheds contact detailsFor further information please contact me on:Antony GoldHead of Retail+44 845 497 8204+44 776 888 3358antonygold@eversheds.comOr email: retail@eversheds.com
    125. 125. © EVERSHEDS LLP 2012. Eversheds LLP is a limited liability partnership.

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