1) Administrative reforms in China have made it much easier for foreign companies to do business, with application processing times decreasing significantly.
2) The negative-list approach being piloted in free trade zones gives foreign investors greater freedom by requiring approval only for investments in restricted areas, shortening approval times.
3) While special treatments for foreign firms are being phased out, officials say reforms aim to provide a more transparent, uniform and fair business environment.
Cecca financial newsletter issue 3 march 2019Shu-Chien Chen
China has become one of the top countries developing fast in attracting foreign direct investment (FDI) in recent decade. In terms of the institutional development of FDI, Chinese authorities have made effort to move forward a step in reducing transaction and regulatory costs for foreign investors. Owing to the difference of transaction structure of greenfield investment and mergers & acquisitions (M&A), China's regulatory strategies on the two types of foreign investment is different, the political concern on corporate control over domestic firms may increase compliance risk and uncertainties for foreign investors who aims to run business by directly acquiring P.R.C enterprises.
Where to find information on the QianHai Special Economic Zone? More here: http://www.hongdaservice.com/blog/where-to-find-information-on-the-qianhai-special-economic-zone
If you're at all familiar with Chinese business news, then you may have heard of a place called QianHai special economic zone.
This zone is a new area of Shenzhen which the Chinese government are hoping will overhaul their economy and financial systems heading into the 21st Century.
While this is clearly important, as a current or potential foreign business owner in China, you will probably be asking: "But what is QianHai, and why is it important to me?"
One of the problems with getting useful and official information in China is that, despite it being out there, it's usually not very clear on where to find it!
Keep reading this blog post as we share some of the key information on QianHai from official Chinese and English language sources...
Cecca financial newsletter issue 3 march 2019Shu-Chien Chen
China has become one of the top countries developing fast in attracting foreign direct investment (FDI) in recent decade. In terms of the institutional development of FDI, Chinese authorities have made effort to move forward a step in reducing transaction and regulatory costs for foreign investors. Owing to the difference of transaction structure of greenfield investment and mergers & acquisitions (M&A), China's regulatory strategies on the two types of foreign investment is different, the political concern on corporate control over domestic firms may increase compliance risk and uncertainties for foreign investors who aims to run business by directly acquiring P.R.C enterprises.
Where to find information on the QianHai Special Economic Zone? More here: http://www.hongdaservice.com/blog/where-to-find-information-on-the-qianhai-special-economic-zone
If you're at all familiar with Chinese business news, then you may have heard of a place called QianHai special economic zone.
This zone is a new area of Shenzhen which the Chinese government are hoping will overhaul their economy and financial systems heading into the 21st Century.
While this is clearly important, as a current or potential foreign business owner in China, you will probably be asking: "But what is QianHai, and why is it important to me?"
One of the problems with getting useful and official information in China is that, despite it being out there, it's usually not very clear on where to find it!
Keep reading this blog post as we share some of the key information on QianHai from official Chinese and English language sources...
Asia Counsel Insights gives readers a concise insight into legal and business developments in Vietnam. This edition has news on the new Law on Tourism, amendment to the Penal Code criminalising certain commercial practices and Law on SMEs.
Why does India need FDI, How will FDI benefit us, What will be the disadvantages? Read everything you wanted to know about Foreign Direct Investment and the role played by Foreign Exchange Management Act, in this Research Report from Resurgent India
China’s growth and appetite for foreign direct investment (FDI) has made Africa its largest investment destination, according to a new report written by the Economist Intelligence Unit (EIU) for leading global law firm, Mayer Brown. The report, “Playing the Long Game: China’s Investment in Africa”, finds that whilst energy and mineral resources have attracted the most Chinese FDI, investments and activities that support Africa’s physical infrastructure is underestimated.
Exploring the opportunities and challenges facing Chinese investors in Africa, the report highlights increased African trade, more direct investment and a surge in export credit financing as the primary drivers of China’s current economic policy towards Africa and looks at the diversity and success of projects that have been financed. It also documents the perception of Chinese investment in Africa and the unique political, cultural and legal challenges of realising projects across such a diverse range of countries.
IN THIS SUMMARY
Over the past few years, China has transformed itself into a powerful, consumer-oriented culture, and many Western companies have flocked to China to take advantage of this new marketplace. However, entrepreneurs from the United States and Western countries often fail to realize that transacting business in China is a far cry from making deals at home. Ted Plafker, a Beijing correspondent for The Economist, leverages his extensive experience in Chinese culture and entrepreneurship to offer a primer for newcomers who are planning to expand their business into China. According to his book, Doing Business in China, “As many foreign companies have already proven, success in China is possible, but only for those with the patience, persistence, and resources to see it through.”
SUBSCRIBE TODAY
http://www.bizsum.com/summaries/doing-business-china
Asia Counsel Insights gives readers a concise insight into legal and business developments in Vietnam. This edition has news on the new Law on Tourism, amendment to the Penal Code criminalising certain commercial practices and Law on SMEs.
Why does India need FDI, How will FDI benefit us, What will be the disadvantages? Read everything you wanted to know about Foreign Direct Investment and the role played by Foreign Exchange Management Act, in this Research Report from Resurgent India
China’s growth and appetite for foreign direct investment (FDI) has made Africa its largest investment destination, according to a new report written by the Economist Intelligence Unit (EIU) for leading global law firm, Mayer Brown. The report, “Playing the Long Game: China’s Investment in Africa”, finds that whilst energy and mineral resources have attracted the most Chinese FDI, investments and activities that support Africa’s physical infrastructure is underestimated.
Exploring the opportunities and challenges facing Chinese investors in Africa, the report highlights increased African trade, more direct investment and a surge in export credit financing as the primary drivers of China’s current economic policy towards Africa and looks at the diversity and success of projects that have been financed. It also documents the perception of Chinese investment in Africa and the unique political, cultural and legal challenges of realising projects across such a diverse range of countries.
IN THIS SUMMARY
Over the past few years, China has transformed itself into a powerful, consumer-oriented culture, and many Western companies have flocked to China to take advantage of this new marketplace. However, entrepreneurs from the United States and Western countries often fail to realize that transacting business in China is a far cry from making deals at home. Ted Plafker, a Beijing correspondent for The Economist, leverages his extensive experience in Chinese culture and entrepreneurship to offer a primer for newcomers who are planning to expand their business into China. According to his book, Doing Business in China, “As many foreign companies have already proven, success in China is possible, but only for those with the patience, persistence, and resources to see it through.”
SUBSCRIBE TODAY
http://www.bizsum.com/summaries/doing-business-china
Joint Ventures in China: Features and main issues of one of the most common and risky foreign investment vehicles in China. If the initial reasons for foreign investors to venture with a Chinese partner were basically the compulsoriness of the law, “tempting” low labor and production costs, tax incentives and friendly tax policies, and the “mirage” of a boundless market, it is important to understand, nowadays, that these reasons are disappearing and foreign enterprises have more safe alternatives, if a joint venture is still a useful and profitable vehicle to operate in China.
China Free Trade Zones discussion paper: Regulating a Free Trade Zone – Simpl...Alex Baulf
George Osborne presented Vice-Premier Ma Kai with a white paper on China’s free trade zones, produced by Grant Thornton in conjunction with TheCityUK and China-Britain Business Council.
* The role of free trade zones
* The role of corporate data collection and transparency
* Data collection, sharing and transparency in China: practice and pilot developments
* The UK approach to corporate data and transparency
* Corporate information collection and transparency The United States of America
* Corporate reporting in Canada
* Successful data collection, utilisation and transparency * Conclusion: Benefits and discussion points
Spotlight On The Shanghai Free Trade Zone - Volume 1MSL
The Shanghai Free Trade Zone (FTZ) has been one of the most anticipated reform measures that reflect the next stage of economic liberalization for China. In this newsletter, MSLGROUP shares an insider’s perspective on the latest developments at the FTZ. We believe that entering it early would bring tremendous opportunities for MNCs operating in China.
The pilot zone which opened on September 29, 2013, is still a work in progress. Local and central authorities are testing potential reform measures with enormous ramifications for companies doing business in China. Read this newsletter to learn more.
Mergers and Acquisitions in China as one of the investment vehicles available for foreign investors and market entry strategy to break into Chinese market. What are the main issues and aspects to carefully take into consideration? What are the alternatives to M&A operations to achieve the same goals in China?
Brunswick China Analysis - Third Session of the 12th National People’s CongressBrunswick Group
On Sunday 15th March, China concluded the third session of the 12th National People’s Congress. The lianghui, as the annual political meetings are commonly known, is one of the most important events on the Chinese political calendar. This year’s lianghui set out further building blocks in the country’s reform agenda.
With China’s top-line growth target lowered to around 7%—its lowest rate in a quarter century—Premier Li Keqiang delivered an unusually frank assessment of the economy’s structural problems, pointing to overcapacity, insufficient innovation and a historically successful economic model that is now having a difficult time driving the economy forward.
Premier Li provided long-term policy direction design to provide an institutional solution to issues that may derail China’s development. In the coming months and years, China’s expectations of those operating in China—whether foreign investors or local Chinese companies—will continue to shift profoundly. Such a period of uncertainty brings new challenges and necessitates fundamentally new ways of conducting business.
For more information please contact our Beijing office: http://www.brunswickgroup.com/contact-us/beijing/
Bangladesh can learn strategy of fdi from chinaM S Siddiqui
There is no reason why Bangladesh will continue keep these sector restricted for public investment with overseas loan against high interest rate. The relevant government departments are proven to be most corrupt and inefficient. The cost of construction is reportedly highest in the world as revealed by different study and comparison with other countries. These sectors may be opened for FDI following the policy of China.
Foreign Invested Partnership Enterprise in ChinaLenge & Partners
Investment vehicles available for foreign investors in China: the Foreign-Invested Partnership Enterprise. How to set up a foreign-invested partnership enterprise (FIPE) in China. Its features, maintenance, taxation.
1. 22 BEIJING REVIEW March 12, 2015 http://www.bjreview.com
R
obert Parkinson, founder and CEO of
RMG Selection, a China-focused interna-
tional recruitment and human resources
consultancy company, recently applied for an
ICP (Internet content provider) license for his
company and it took him less than a month.
When he carried out the same process for an-
other website five or six years ago, the whole
processtookmorethantwomonths,Parkinson
recalled.
The Chinese Government’s drive to stream-
line administration and delegate power to lower
levels has made it much more convenient for
foreigncompaniestodobusinessinChina.
“Things have become a little bit easier. The
reform has encouraged smaller and medium-
MakingItSimple
Foreign companies are finding it easier to conduct businesses in
China thanks to administrative reforms By Ji Jing
sized companies to enter the market because
it becomes quicker to establish an enterprise
withinChina,”Parkinsonsaid.
Simplifiedprocedures
Jens-Peter Otto who had worked in China for
six years as a PricewaterhouseCoopers partner,
providing consultancy for German companies
setting up branches in China, also welcomed
the simplified administrative procedures. He
was especially impressed with the abolishment
ofthecapitalverificationreport.
Inthepast,allcompanies,includingforeign-
invested entities in China, needed such reports
verifying their paid-in capital upon initial es-
tablishment of a company or when there was
a change in capital or shareholders. Reports
had to be issued by certified public accounting
firms.
The Third Plenary Session of the 18th
Central Committee of the Communist Party of
China terminated the practice in order to sim-
plifyapprovalprocedures.
“Although we would earn money because
we usually prepare this capital verification re-
port, we welcome this change that has been an
additionalburdenforcompanies,”Ottosaid.
The minimum of 30,000 yuan ($4,900) reg-
istered capital requirement for starting a limited
liabilitycompanywasremovedin2013.
“Many approval procedures have been
abolished, which has saved money and made
it easier for foreigners to start a company. As a
consequence,manyofourmembercompanies
are showing a willingness to invest in China,”
said Robert Sun, President of the American-
ChineseCEOSociety.
Broadenedaccess
In addition to measures of streamlining admin-
istration, the negative-list approach first tested
in the Shanghai Free Trade Zone (FTZ) has also
made it easier for foreign companies to start
businessesinChina.
Under the negative-list approach, foreign
investors will need to have their projects and
companiesapprovedonlywhentheinvestment
is on the negative list, which specifies areas pro-
hibitedorrestrictedforoverseasinvestors.
China has been using the Catalogue for
the Guidance of Foreign Investment to man-
age foreign investment. The catalogue lists
three categories of industries for foreign invest-
ment: encouraged, restricted and prohibited.
All foreign investments should be conducted
following the catalogue and are subject to an
approvalprocess.
However, the negative-list approach has
A “negative list” is usually appended to a bilateral
investment treaty. It specifies areas where foreign
capital is banned or limited. Areas not listed are
assumed to have no restrictions and only need to
register with relevant authorities. In contrast, in the
past, the establishment of foreign-invested enter-
prises was subject to the development approvals,
reformcommissionsandcommerceauthoritiesat
bothnationalandlocallevels.
The approach was first adopted in the China
(Shanghai) Pilot Free Trade Zone (FTZ), an im-
portant test field in China for freer trade and
a more liberal business and financial environ-
ment,launchedinSeptember2013.Itmarksan
attempt to transform the investment adminis-
tration system in China from approval-based to
aregistration-based.
An updated version of the negative list released
by authorities of the Shanghai FTZ on July 1 re-
duces the restrictions and conditions for overseas
investmentfrom190to139.
China will start substantive negotiations on the
negative list with the United States in early 2015
as part of ongoing bilateral investment treaty talks
betweentheworld’stwolargesteconomies.
The State Council decided last December to
launch three new FTZs in north China’s Tianjin,
southeast China’s Fujian Province and south
China’s Guangdong Province, where many special
measures piloted in the Shanghai FTZ will be repli-
catedincludingthenegative-listapproach.
The Guangdong FTZ will mainly serve compa-
nies in the high-end financial service industries
located in Hong Kong, the Pearl River Delta region
and Macao. The Tianjin FTZ targets those located
innorthChina,wheresome80Fortune500com-
panies have established their presence, including
many international multinational firms. Meanwhile,
theFujianFTZwillfocusontradewithTaiwan.
The negative-list approach was adopted by
a draft Foreign Investment Law released by the
MinistryofCommerceonJanuary19.
ApplicationoftheNegative-ListApproach
COVER STORY
(Compiled by Beijing Review)
2. http://www.bjreview.com March 12, 2015 BEIJING REVIEW 23
given foreign investors a
higher degree of freedom
as they only need to go
through a registration pro-
cess when the industries
they invest in are not on the
list, which can shorten the
time to obtain a license to as
littleasfourdays.
“The negative-list model
conforms to the interna-
tionalnormandtheongoing
reform of streamlining ad-
ministration in China,” said
Shen Danyang, spokesman
oftheMinistryofCommerce.
“The difficulty people
have found in the past in
doing business is that the
country gave us a very am-
biguous business climate.
No one was quite sure
what the rules were. The
government changed or had
to change the rules very rapidly, leaving no
time for administrators, lawyers and profes-
sionals to catch up,” Parkinson said.
“What the government is trying to do with
the negative-list approach and the whole con-
cept of the Shanghai FTZ is to make it easier for
people to know what is allowed and what isn’t,”
headded.
Adaptingtochanges
Although foreign companies are enjoying more
convenience while doing business in China, the
gradual abortion of the special national treat-
ment and the rising labor and land costs in the
country are causing some concerns among the
foreigncommunity.
In order to attract foreign investment at
the beginning of the reform and opening-
Nam,andIndonesiaareabletoofferlabormore
cheaply,”saidParkinson.
However,hethinksthatthisshouldnotbea
question of concern because the key to China’s
sustained economic growth is to spur domestic
consumption.
“Once foreign investment is introduced to
the service sector, there will be more competi-
tion between domestic and foreign companies
in the industry, which will inevitably lower prices
andencouragespending,”saidParkinson
He also pointed out that Shanghai FTZ’s
practice of opening up more service sectors
to foreign investment will attract Western
countries like the United Kingdom, which are
service-based, to further export their services
to China. n
jijing@bjreview.com
up drive in the late 1970s, the Chinese
Government has offered foreign firms special
national treatment, exemplified by a lower
tax rate or tax exemption and cheap land
rent fees.
“These preferential treatments have been
growing increasingly incompatible with the
demand for fair competition of the market
economy and imminent change,” said Kuang
Xianming, Director of the Center for Economic
Transition under the Hainan-based China
InstituteforReformandDevelopment.
“As the special treatment is being phased
out, foreign companies will be subject to more
uniform supervision, fairer treatment and more
transparentrules,”Kuangadded.
“China is becoming less and less attractive
to foreign companies as a workshop or manu-
facturing base, because countries like India, Viet
CHENFEI
EASY ACCESS: Company
representatives go through
company registration processes
at the service hall of the China
(Shanghai) Pilot Free Trade Zone
on September 29, 2014