In this issue we deal with the various structural issues that affect your manufacturing or service business in China, and how to maximize your return on investment by paying attention to detail in tax structuring, legal structuring issues, calculating registered capital amounts, VAT rebates and profits repatriation matters. We highlight common problems and mistakes made when processing approvals applications, how to avoid these and how to get the most from your China investment. It includes the following articles:

"Faulty & Inefficient China Business Applications"

By Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates.

This extensive and detailed piece covers common mistakes and problems that occur in China when investors are not sufficiently aware of Chinas foreign investment law, and what can be done to mitigate against these issues. The article explores issues affecting China Representative Offices, Foreign Invested Commercial Enterprises, Wholly Foreign Owned Enterprises as well as Joint Ventures, and examines subjects such as the dangers of undercapitalization, misunderstanding the complete financing aspects of registered capital, the variety of tax treatments that need to be considered when investing in China and the situations that affect these. In addition it examines IP problems, mergers & acquisitions in China, considerations when hiring Chinese staff, and other China operational pitfalls to be aware of.


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In this issue we deal with the various structural issues that affect your manufacturing or service business in China, and how to maximize your return on investment by paying attention to detail in tax structuring, legal structuring issues, calculating registered capital amounts, VAT rebates and profits repatriation matters. We highlight common problems and mistakes made when processing approvals applications, how to avoid these and how to get the most from your China investment. It includes the following articles:
"Customizing Your China WFOE:"
By Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates
This extensive piece looks at all the aspects of planning and structuring your China WFOE, including the distinctions between WFOE and FICE, and the different aspects of planning a business involved in manufacturing, processing or assembly, services, and tax implications of exporting as against domestic sales. The calculation of Registered Capital amounts for China investments is also explored in depth, as are obtaining tax rebates on export, as well as providing details on how to maximize your profitability in China via tax treatment mechanisms. “National & Regional Updates” This includes pieces from Sabrina Zhang, Regional Partner, Dezan Shira & Associates Beijing, on the 2008 Olympic infrastructure developments, from Adam Livermore, Senior Associate, Dezan Shira & Associates Dalian on Dalian software development industry, from Alice Chen, of Dezan Shira & Associates Shanghai concerning developments at Shanghais Bonded Logistics Zones and the new Bonded Port, and from Fiona Yuan, of Dezan Shira & Associates Shenzhen office concerning new policies for Shenzhen employee pension funds.
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China's second-tier cities are the "flavour of the month" - if not the next few years. In this extensive survey of the economy, foreign direct investment environment and infrastructure of 24 cities across China, we provide data and descriptions that will help you find the right place for your new manufacturing facility, retail outlet or service industry office. These 24 cities account for 12% of China's population, and in 2005 generated 21% of national GDP, and consumed 45% of national used FDI. This extensive article, written in-house by Dezan Shira & Associates staff on a national basis, features demographics, descriptions, investment incentives and provide details of investment zones in the following cities throughout China: Changchun, Chengdu,

Chongqing, Dalian, Dongguan, Guiyang, Haikou, Hangzhou, Hefei, Kunming, Lanzhou, Nanjing, Ningbo, Qingdao, Shantou, Shaoxing, Shenyang, Taiyuan, Urumqi, Wenzhou, Wuhan, Xiamen, Xi'an, and Zhuhai. It includes data on GDP, FDI, Per capita disposable income of local Chinese residents, local Chinese university rankings, air passenger volume at local Chinese airports, cargo volumes, numbers of western branded hotels, international schools and hospitals in each Chinese city, foreign retailers, an overview of selected foreign investors in each location and local Chinese government contacts. This issue also includes an introduction to Dezan Shira & Associates, who provided the research for this issue, by the firms Senior Partner, Chris Devonshire-Ellis.
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In this issue we deal with applying for Encouraged Industry status in China and identify which industry sectors can claim benefits from investing in the PRC. Being a foreign investor with "encouraged" status can bring you a number of advantages. Notably, these are the ability to obtain VAT and custom duty exemption on imported equipment, VAT refunds on domestic-made equipment and increased tax holidays or turnover tax refunds. Here we consider these in detail, which industries are encouraged, the differences between these and "permitted", "restricted" and "prohibited" industries in China, with examples in addition to the regulatory framework governing these definitions. Written by Dezan Shira & Associates, the article also explains and details the "Catalogue for the guidance of foreign invested industries in China" with the thirteen industry sectors covering all main industries in the PRC as follows: China farming, forestry, animal husbandry & fishery industries; China mining and quarrying industries, China manufacturing industries, China production and supply of power, gas and water; China water resources management, Chinese communication, transportation, storage, post and telecommunication services, Chinese wholesale, retail and trading industries, China's real estate industry, China social services industry, China’s public health, sports and social welfare industries, Chinese education, culture and arts, broadcasting, film and television industries, China scientific research and poly-technical services, in addition to the "Catalogue of Priority Industries for Foreign Investment in China". Procedures for applying for Encouraged Industry Status in China are also identified and explained in full.
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This issue highlights the detail of China's new National 5 year plan following Ministerial level meetings held by Chris Devonshire-Ellis, Senior Partner of Dezan Shira & Associates, and Publisher of "China Briefing" with various Chinese Government bodies to discuss and be briefed upon matters of policy and the implementation of this. This issue covers details of Chinas foreign investment policy in addition to replies given to specific questions asked about tax, regulatory and other development issues that affect foreign investment in China on a national basis. The main article, "De-Briefing Session Following the 11th Five Year Plans Introduction by the Chinese National Peoples Congress" features private meetings held by Chris Devonshire-Ellis with Wang Li, the Vice Commissioner of the State Administration of Tax, and discussions on foreign and domestic enterprise income tax unification, foreign nationals in China and their worldwide income tax liabilities, China property tax reform, vehicle consumption tax, and a proposal to alter the audit fiscal year end reporting structure. Devonshire-Ellis also met with Liao Xiaoqi, the Vice Minister of the Ministry of Commerce, and discusses matters such as Hong Kong CEPA applications, and Chinas and Hong Kongs roles within ASEAN. This is followed by a briefing from Sun Songpu, Chinas Vice Minister of Customs, and discussions concerning co-location customs clearance between China, Hong Kong, Macao and Guangdong Province, China's growth in customs duty revenues, the proposed Vietnam / Yunnan free trade area, increased taxes on energy intensive products, the standardization of Chinas national customs treatment, and the new Chinese customs declaration forms. Devonshire-Ellis also met up with Zhu Zhixin, Vice-Director of the China National Reform & Development Commission, to discuss basic tenents of Chinas new five year plan and the strategic thinking behind this. Zhu is an advisor to Hu Jintao, the Chinese Premier. Meetings with the China Security Regulatory Commission are also discussed with Tu Guangshao, the Vice-Chairman, over matters concerning Hong Kongs role as a centre for Chinese listings, Chinese competencies when trading futures on international markets, the launch of QDII and the raising of Chinas QFI Investment ceiling. Chinese real estate investment funds and Chinese corporate governance and enforcement were also discussed by Devonshire-Ellis with the SRC. Finally, discussions were held with Beijings Vice Mayor Lu Hao, over Beijings economic development and the plans for the 2008 Olympics.
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