Author Archives: China Briefing

China Regional Focus: Dalian, Liaoning Province

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By Rainy Yao

Dalian: The Pearl of Northern China

As the biggest free trade port in Northern China, Dalian is a modernized international shipping metropolis serving as a gateway to Beijing and Tianjin. In this article, Rainy Yao from Dezan Shira & Associates takes a look at this national garden city with abundant commercial opportunities. Continue reading…

Ban on Video Game Consoles Tentatively Lifted in the Shanghai FTZ

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SHANGHAI – On Monday this week, details were announced regarding the lifting of China’s 14-year ban on video game consoles, set to begin as a pilot program in the Shanghai Free Trade Zone (FTZ). The lifting of the ban is poised to fundamentally alter China’s lucrative video gaming market, which is currently dominated by PC and mobile games, as the giants of console gaming compete over the world’s 3rd largest video game market in terms of revenue (valued at 123 billion yuan).

Under the changes, foreign-invested enterprises (FIEs) must apply to the Shanghai Municipal Administration of Culture, Radio, Film & TV on a case-by-case basis for approval to manufacture and sell video games in China – a process stipulated to take 20 days. Application requires the submission of a thorough catalog of all content to be included in the final market version of the product, including bilingual transcripts of all video, audio and text, and images of the product exterior. Continue reading…

Newly Signed China-Germany DTA Continues Trend of Sino-European Economic Cooperation

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SHANGHAI – As a further sign of China’s growing economic cooperation with Europe, the leaders of China and Germany signed a double taxation agreement (DTA) on March 28, 2014. The agreement comes in the wake of, and shares strong similarity to, several important DTAs signed between China and other European countries in recent years. For example, a DTA between China and France signed on November 26, 2013 is estimated to go into effect on or after January 1, 2015.

China and Germany have shared a DTA since the mid-80′s. The revised version is the product of negotiations begun in 2007 and is due to go into effect 30 days following the completion of each country’s domestic ratification measures. Continue reading…

South China’s Balancing Act Between Raising Wages & Keeping Investors

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Vietnam Beckons as South China Governments Walk a Development Tightrope 

Op-Ed Commentary: Alberto Vettoretti, Managing Partner, Dezan Shira & Associates

Annual increases in Chinese worker salaries and the increasing mandatory welfare costs associated with this are making some local governments in China have to strike a fine balancing act. On one side are investors facing increasing overheads at a time when Chinese exports are weak. On the other is social discontent from workers demanding higher salaries and benefits.

In South China for example, minimum wages were last increased in Dongguan, Foshan, Zhuhai and Zhongshan on a mandatory basis on May 1st of last year. This year, no announcement has been made, although rumors are the increase is being deferred a few months to August. Continue reading…

China Regulatory Brief: Preferential Tax Policies & SME Support

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China Reduces CIT Rate for Encouraged Industries in Western Region

On April 16, the National Development and Reform Commission (NDRC) released the “Catalog for Encouraged Industries in Western Region of China” (Opinion Seeking Draft, hereinafter referred to as the ‘Catalog’)” with the aim of furthering development of the western region in China. Eligible enterprises in the encouraged industries listed in the Catalog will enjoy a reduced corporate income tax (CIT) rate of 15 percent. All opinions should be submitted before April 30, 2014. The complete version of the Catalog can be found here. Continue reading…

Understanding China’s Youth Consumer Marketing

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Interview with Kevin Lee, COO – China Youthology

China Youthology offers provocative insights about Chinese youth and facilitate the use of insights to spark actions, to help brands be part of youth culture, to be relevant and meaningful to today’s individual and society.

Please tell us a bit about China Youthology and what it does.

China Youthology is a consumer insight agency and one of the top quality research companies in China. Youths in China today are really striving to find meaning and we believe brands have a role to play in that. We focus on digging very deep into youth culture, understanding youth and their changing values, including their lifestyles, behaviors, what they say, what decisions they make, what they buy, etc. We take all that information and we help brands understand and bring them closer to young people today. Continue reading…

Internationalizing Your China WFOE

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Transferring WFOE Equity Ownership To Hong Kong or Singapore Companies Provides Far More Trade Flexibility

Op-Ed Commentary: Chris Devonshire-Ellis

In the rush to get into China over the past decade, many foreign investors established WFOEs – either as trading and services companies, or as manufacturing entities in their own right. For many, this is a policy that has worked very well – the legal and regulatory structures are well defined and understood. Today though, as foreign investors start to eye other markets in Asia, the China WFOE is starting to prove awkward as a base from which to launch into Asia. There are a number of reasons for this:

  • China WFOEs are geographically limited in their trading scope as the RMB is not an internationally traded currency, meaning treasury issues arise with funding essentially restricted to China only;
  • It can be extremely difficult if not impossible to establish overseas subsidiaries of a China WFOE, despite the fact it is a limited liability company in its own right. Continue reading…

An Overview of China’s Retail Industry

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By Eunice Ku, Dezan Shira & Associates

The following is an excerpt from the April 2014 edition of China Briefing Magazine, titled “China Retail Industry Report 2014.”

Changing Consumer Market

Moving towards a consumption – and service – focused economic model

Underpinned by the steady rise of household income, China’s retail market has become one of the most lucrative and rapidly growing in the world. China is currently the world’s second largest retail market, and Asia’s largest. It is expected to surpass the U.S. to become the world’s largest retail market by 2016. After years of accelerated growth and annual expansion rates of 10 percent or more, China’s growth in 2013 slowed down to 7.7 percent – level with the figure for 2012. This slowdown in growth is consistent with China’s effort to carry out a major overhaul aimed at weaning its economy off its decades-long reliance on heavy industry, export-oriented manufacturing, state-driven investment, as well as investment in infrastructure. Meanwhile, to rebalance the nation’s economy, policymakers are attempting to shift towards a more consumption- and service-driven model, hoping to foster and sustain more productive growth over the next decade and beyond. Continue reading…