Author Archives: China Briefing

Investing in China’s Art Auction Market

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By Roy K. McCallChina art auction

China’s art and antiques market is the world’s largest, with 2013 sales exceeding US$8.5 billion, up 28.8 percent from 2012.The overseas market of Chinese art and antiques in 2013 was US$2.3 billion, representing an even larger increase from the year before of 42 percent.

China’s affluence is reaching beyond China and Chinese art. In November 2014 at a Sotheby’s (NYSE: BID) auction, Wang Zhongjun, chairman of the China’s film studio Huayi Brothers, bought Van Gogh’s 1890 painting Still Life, Vase with Daises and Poppies for a record US$62 million – more than double the US$28.2 million for a Picasso that Dalian Wanda paid at a Christie’s auction one year earlier.

Transparency into the Chinese art market is growing thanks to professional art news providers such as Artron.net, Hurun, YangGallery.com and others. Artron provides information in both Chinese and English on global auctions and art, not just about Chinese art or China’s market.  In addition, by mid-2015, artnet, with the China Association of Auctioneers is expected to release the third edition of its Global Chinese Art Auction Market Report. 

Related Link IconRELATED: Broad Strokes of Success for Auction Houses in China’s Fine Arts Market

Poly International Auction of China’s Poly Group, a $40 billion state-owned conglomerate, is China’s leading government controlled auction house and the world’s third largest.  But others are enhancing competition and transparency. Poly’s archrival China Guardian ( cguardian.com) publishes seasonally active auctions in paintings, calligraphy, porcelain and most recently, coins.  Guardian’s auctions have been mainly held at Beijing’s International Hotel on Jianguomennei, and have been extended occasionally to Hong Kong’s Island Shangri La or the JW Marriott in Pacific Place.

Art auctioneers compete aggressively. To win business the largest auctioneers might guarantee a minimum bid, and have been known to lose millions when actual bids do not clear the minimum.

Art investors have also been concerned about distinguishing fakes. Celebrity Zhang Daqian: (b. 1899 Sichuan – d. 1983 Taipei) was renowned as both a forger and a dealer. When he noticed that his buyers could not appreciate the difference, Zhang turned to forgery and produced outstanding works reminiscent of Ming master Shitao. In the late 1990’s skillfully forged paintings of Fan Zeng became so prolific in Tianjin’s Ancient Culture Street that police began confiscating them with Fan Zeng. In 2014, one group of fakers even issued a catalogue meant to guide investors in authentic art which itself was marketing fakes.

In 2006, China’s Ministry of Culture initiated an appraisal committee to provide art consultation services to the public.  China’s National Development and Reform Commission is also attempting to establish a credible and independent fine arts appraisal agency.

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Hong Kong Banks Shut Down US Accounts Rather Than Deal with FATCA

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By Benedict Lynn

Due to its geographical proximity to the mainland, modern and (until now) friendly banking system and transparent legal regime, Hong Kong has long served as a popular gateway into China for foreign businesses. Americans in particular have favored the former British colony, which retains its widespread use of the English language and Western business ideals, as a launching pad for their operations into mainland China.

However, since the Foreign Account Tax Compliance Act (FATCA) came into effect in early July, many Hong Kong based banks have been refusing to open new accounts for, and even shutting down the existing accounts of, American individuals and corporations.

Dezan Shira & Associates have been advising several of our American clients who have found themselves in this frustrating and potentially catastrophic situation. In this article, we examine the effects of FATCA on American businesses and taxpayers operating out of Hong Kong, as well as the implications for Hong Kong’s future as a means of penetrating the Chinese market.  Continue reading…

China Announces Official 2015 National Holiday Schedule

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China’s General Office of the State Council released the “Circular on the Arrangement of Certain Holidays in 2015 (guobanfamingdian [2014] No.28)” on December 16 and announced the official national holiday schedule for 2015 as follows:

New Year

  • January 1  – 3  (3 days in total)
  • January 4 (Sunday) is an official working day.

Spring Festival

  • February 18 - 24 (7 days in total)
  • February 28 (Saturday)  and February 15 (Sunday) are official working days.

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Investing in China’s Medical Device Industry, Part 2

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CB 2014 11_China Investment Roadmap- The Medical Device IndustryBy Zhou Qian, Kyle Freeman and Matthew Zito

Investing in China’s Medical Device Industry, Part 1

Licensing regime

Generally, any business entity engaged in medical device manufacturing or trading must obtain specific licenses in addition to the normal business licenses, the procedures and requirements of which are quite different depending on the classification into which the device falls. In addition, all the medical devices are required to be registered with the relevant authorities. Following the amended regulation State Council Order No.650, applicants are no longer required to obtain a medical device manufacturing license before medical devices registration provided that they are fully in compliance with good manufacturing practices requirements during product design and development.  That is to say, the R&D-based companies can apply for products registration without building up manufacturing facilities, which will save them a substantial amount of time and resources.

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China Regulatory Brief: IIT on Equity Transfer Income, ETF Stamp Duty Exemption, Financial Support for Trust Companies

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China-Regulatory-Brief

China Clarifies IIT Rules on Income from Equity Transfer

On December 7, China’s State Administration of Taxation (SAT) released the “Trial Administrative Measures on Individual Income Tax on Income from Equity Transfer (SAT Announcement [2014] No.67),” which will take effect on January 1, 2015. According to the Measures, taxpayers shall pay the individual income tax (IIT) on income derived from equity transfer based on the “income from transfer of property” category stipulated by China’s IIT law. It will be taxed at a rate of 20 percent. In order to file a tax declaration, the tax payer will need to present all relevant documents (including the equity transfer contract, assessment reports of the property value and ID) to the local tax authorities.

Hong Kong to Exempt ETF Stamp Duty

The Hong Kong government recently announced its 2014-15 Budget which proposed the exemption of stamp duty for the transfer of shares or units of exchange traded funds (ETFs). The ETF stamp duty exemption is expected to boost Hong Kong’s ETF market and offer more business opportunities for market practitioners. The budget will be introduced into the Legislative Council on December 17, 2014. Currently, approximately 40 percent of Hong Kong investors need to pay ETF stamp duty.

According to the Hong Kong Exchanges and Clearing (HKEx) data, 121 ETFs have been listed on the Hong Kong bourse provided by 26 international and mainland ETF fund managers by October this year. The average daily turnover of the Hong Kong ETF market increased from HKD2.4 billion in 2010 to HKD4.34 billion in October, 2014, making Hong Kong one of the largest ETF centers in the Asia-Pacific region.

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China Compliance Issues For Foreign Investors

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CDE Op-Ed Commentary

As has been extensively reported in the media, the Chinese government has indicated it will be ‘cracking down’ on non-compliant foreign investors during 2015. In actual fact, this has always been the case – foreign investors are under the highest level of scrutiny by the Chinese authorities in everything from adherence to business scopes to payment of tax. They exist under a “Level One” platform of systematic checks by the Chinese tax bureau. At the opposite end – Level Four – are China’s State Owned Enterprises – with the minimum level of scrutiny. Continue reading…

Employing Foreign Nationals in China – New Issue of China Briefing Magazine

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CB 2014 12_cover_250x350The newest issue of China Briefing Magazine, titled “Employing Foreign Nationals in China,” is out now and available to subscribers as a complimentary download in the Asia Briefing Bookstore through the month of December. To subscribe to China Briefing and download this issue for free, please click here

Contents:

  • Employing Foreign Nationals in China: Visa Procedures
  • Retrospective: 15 Years of China Briefing
  • Paying Foreign Employees: IIT and Bonus Planning
  • Special Feature: Remitting Your RMB Abroad

Although some speculation has it that the population of foreigners working in China is in decline, our experience at Dezan Shira & Associates speaks otherwise, where questions regarding the individual income tax (IIT) liability of foreign nationals, as well as work visa procedures, continue to pour in at a steady stream. Continue reading…

China Briefing Magazine Celebrates 150th Issue

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Glasses of champagne and fireworks,new year celebration.

China Briefing Magazine reaches a significant milestone tomorrow with the publication of our 150th issue over a period stretching back 15 years. The new issue, titled “Employing Foreign Nationals in China”, details all employer and employee-side responsibilities for expats working in China, including individual income tax liability, visa requirements and remitting RMB abroad, and will be available for download from the Asia Briefing bookstore tomorrow.  It is a complimentary download for subscribers. Subscription to China Briefing is also free and can be obtained here

CB 2014 12_cover_250x350

The 150th issue of China Briefing “Employing Foreign Nationals in China”. Subscribe now to get your free copy.

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Asia Briefing Bookstore Catalogue 2013
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