Author Archives: China Briefing

Who’s to Blame for the Price of an Xbox in China?

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Op-Ed Commentary: Matthew J. Zito

SHANGHAI – There was good news and bad news for gamers in China this week as Microsoft announced that the Xbox One will be hitting the country’s shelves on September 23, after the lifting of a 14-year ban on gaming consoles. The domestic version of the Xbox will be manufactured in the Shanghai Free Trade Zone and come loaded with goodies to entice Chinese consumers, including a six-month subscription to Xbox Live Gold, an extended warranty, and eventually, “hundreds of thousands of hours” of localized content—created through a partnership between Microsoft and Tencent Holdings. Nearly 5,000 preorders have been placed on ecommerce site JD.com with still a month-and-a-half to go before delivery. Continue reading…

China Outbound: Cost Considerations Boost ASEAN and India’s Manufacturing Advantage

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Our Latest Round-Up of Business News Affecting China-Based Businesses Investing in Asia

In this edition of China Outbound, we highlight the impact of growing labor costs in China and consider the many solutions available to China-based manufacturers, including the benefits of a China +1 strategy, the implications of adapting your enterprise to meet the country’s evolving consumer market, and the competitive advantages found throughout ASEAN and India for manufacturing operations. Understanding the benefits of regional FTA agreements and grasping the region’s shifting cost structures is more important than ever as Asia’s emerging markets rapidly adapt to production and consumer demands. Continue reading…

License & Registration, Please: New Features of a Business License in China

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By Matthew Zito and Rainy Yao

SHANGHAI – If your company has been successfully operating in China for some time, chances are you’ve seen your fair share of business licenses. These, along with a company’s articles of association, are the basic documents of corporate registration in China, held by any legitimate enterprise, foreign-invested or otherwise. A business license is also useful for confirming that one’s partners are who they purport to be, through cross-checking listed information such as the company name, business scope, registered capital, etc. That is, provided the business license itself isn’t a forgery.

Any in-house legal team worth its salt will be attentive to the possibly of fake licenses, but recently you may have noticed some differences in the business licenses coming across your desk. Before discounting them as forgeries, it might be helpful to review changes made to the format of business licenses based on the amended Company Law that went into effect in March of this year. Continue reading…

Raise or Fold: Changing the Registered Capital of a Company in China

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By Rainy Yao, Maria Kotova and Matthew Zito

SHANGHAI — In China, the Company Law stipulates that all enterprises, foreign-invested or otherwise, must register a fixed level of operational capital with the relevant authorities—deemed the company’s “registered capital”—as part of the basic corporate establishment process. Owing to strict foreign exchange controls, a foreign company’s registered capital is often the only funds it has access to for paying its operational expenses prior to becoming cash flow positive.

This core piece of information is contained within a company’s articles of association and printed on its business license, making it somewhat burdensome to modify. Nevertheless, for a variety of reasons, it is sometimes necessary (or beneficial) for a company to increase or decrease its registered capital. Doing so requires filing an application with the original Administration of Industry and Commerce (AIC) of registration, with the procedure strongly differing between an increase or decrease. Like other types of company registered information (name, business scope, etc.), changes of registered capital are publicly accessible via AIC records. Continue reading…

Alternative Investments: China’s Rich Looking to Art, Wine and Jewelry

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By Emily Liu

As the Chinese economy powers ahead, it is catapulting many into the ranks of the wealthy and pulling large swaths of the population into its burgeoning middle class. According to consultancy group Knight Frank’s 2014 Wealth Report, there are currently 7,905 ultra-high net worth individuals (UHNWI) in China—the third largest such population in any country— and this number is set to grow by 80 percent in the next decade.

Not surprisingly, these wealthy individuals, who have at least US$30 million in assets, are constantly in search of avenues to spend and invest their money. In Asia, 39 percent of UHNWIs expect to increase their spending on luxury goods in 2014. The Chinese appetite for luxury has been well documented, but as Chinese consumers mature and growth in the luxury market cools, the state of luxury consumption and investment is rapidly evolving. Continue reading…

China Regulatory Brief: RQFII Expansion & Bilateral Currency Swap Agreement

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Shanghai FTZ Loosens Requirements for Foreign-Invested Certification Authorities

On July 24, the Shanghai Entry-Exit Inspection and Quarantine Bureau announced the approval of the Certification and Accreditation Administration of China’s (CNCA) implementation of further reforms for the approval and supervision of foreign-invested certification authorities (CA) in the Shanghai Free Trade Zone (FTZ). To encourage the establishment of foreign-invested CAs within the Shanghai FTZ, the CNCA has implemented the following policies:

  • Cancellation of the filing procedure for the representative offices of offshore CAs located within the Shanghai FTZ;
  • Removal of the approval process for foreign-invested CAs to set up unincorporated branches within the Shanghai FTZ;
  • Simplification of approval documents and materials for foreign-invested CAs within the Shanghai FTZ; and
  • Acceleration of the approval process.

Continue reading…

New Provisions on EIT Liability for Foreign Transportation Service Providers Set to Come into Force

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SHANGHAI – Provisions clarifying the tax liabilities in China of foreign transportation service providers doing business with Chinese charterers are due to come into effect on August 1, 2014. Overall, the provisions, as contained in the Notice on Provisional Measures on the Collection of Tax on Non-Resident Taxpayers Engaged in International Transportation Business (the “Notice”), strengthen the tax authority’s ability to collect from foreign companies, even those lacking of a legal presence in China. Continue reading…

Adapting Your China-Based Manufacturer to Meet the Country’s Evolving Manufacturing Needs

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SHANGHAI – As low-cost production moves away from China, and other Asian nations become efficient at mass manufacturing, healthy economic growth require that China create higher-skilled manufacturing jobs, become more innovative and develop high-tech production. China’s Twelfth Five-Year Plan has indicated a shift in emphasis towards infrastructure and high tech industries, and policy makers have set a target of nine percent annual growth in the production of more sophisticated goods. In fact, sixty percent of China’s exports are now medium- or high-tech goods, a substantial increase from less than 40 percent not ten years ago, according to Bloomberg Businessweek. Continue reading…

Asia Briefing Bookstore Catalogue 2013