e-Commerce in Asia, the latest publication from Dezan Shira & Associates, is out now and available for complimentary download through the Asia Briefing Publication Store.
In this report:
- Step-by-Step Guide to Establishing an e-Commerce Presence in Asia
- China, Vietnam, and India e-Commerce Market Summaries
- Investing in China, Vietnam, and India’s e-Commerce Markets
As the digital revolution transforms shopping habits worldwide, emerging markets in Asia stand out as enormous opportunities for foreign investment. Rising internet penetration, a growing consumer base, and rapidly developing logistics infrastructure contribute to burgeoning e-commerce activity in all three of China, Vietnam, and India.
China’s e-commerce market is already the world’s largest, with established online shopping giants catering to the varied needs of increasingly discerning consumers who value the quality and trustworthiness of foreign products. The e-commerce industry in Vietnam is comparatively green, though improving infrastructure and connectivity present opportunities not just for sellers but also ambitious companies seeking to capitalize on the fractured nature of the country’s online retail industry. India is somewhere in between, boasting rapidly growing internet penetration and a massive potential consumption class as investors benefit from the recent relaxation of previously unclear and restrictive government regulations.
By Allan Xu Manager, Business Advisory Services
Editor: Alexander Chipman Koty
Dezan Shira & Associates, Shanghai
Although many employers in China know that the labor contract of an employee can be dissolved at any time during the probationary period, most are unaware of the restrictions governing this termination procedure. According to China’s labor laws, the ability to terminate a labor contract during the probationary period is limited to the specific circumstance “where it is proved, on the expiry of the probationary period, that a worker has failed to meet employment requirements”. In practice, this rule is endowed by the law as a right for the worker, and it is the employer’s burden to prove that the employee “has failed to meet employment requirements” if the employer intends to dissolve the labor contract during the probationary period. Here, a case involving this situation will be discussed, along with practical advice for managing employees during the probationary period.
China Exports and Imports Fall in June Signalling Further Slowing Demand
China’s exports made a further decline last month, partially due to diminished demand overseas, falling by 4.8 percent from the same period last year, after falling by 4.1 percent in May. Imports were also down by 8.4 percent, after falling by 0.4 percent in May, according to the General Administration of Customs. Trade surplus reduced to US$48.1 billion in June from May’s US$50 billion. Demand from abroad is expected to remain weak, especially after the UK’s departure from the European Union. However, things may look more hopeful in the second half because of a weaker yuan and increasing demand from emerging markets.
By Dezan Shira & Associates
Editor: Zolzaya Erdenebileg
This article is an excerpt from the June-July edition of China Briefing Magazine, “Understanding Mergers & Acquisitions in China”. Download the full issue here.
The year 2015 was a transformative year for mergers and acquisitions (M&A) in China. During the first half of last year, China’s outbound M&A volume exceeded its inbound, with 382 deals worth US$67.4 billion by the year’s end, making the country a net capital exporter. Inbound foreign M&As, meanwhile, have continued their upward yet slow expansion. Their piecemeal development is due in part to China’s ostensibly complex regulatory framework surrounding acquisitions, foreign apprehension about slower growth, and strong domestic players.
By Shirley Chu
Manager, Corporate Accounting Services
Dezan Shira & Associates, Dalian
On June 29, China’s State Administration of Taxation (SAT) issued the “Announcement on the Administration of Related-party Transactions and Contemporaneous Documentation (SAT Announcement  No. 42)”, which introduces a three-tiered documentation framework that will replace its current transfer pricing documentation rules.
The Announcement was released following the opinion-seeking draft publicized by the tax bureau in September 2015, and is largely consistent with the BEPS (Base Erosion and Profit Shifting) project launched by the Organization for Economic Cooperation and Development (OECD). Compared to the 2015 Draft – which has been discussed in our previous article – the Announcement revised some terms and further clarified the requirements for reporting companies, as well as the information they need to submit. Below, we provide a brief summary of the key information taken from the Announcement, and offer suggestions for multinational companies seeking to repatriate their profits from China to their headquarters.
By Stephen O’Regan
Associate, International Business Advisory
Dezan Shira & Associates, Guangzhou
While a labor contract is vital in any employer-employee relationship, many employers overlook the importance of a having a staff handbook in China (also called an employee handbook or company rulebook). However, there are some key provisions that are not contained in standard contracts. While an employment contract details important terms such as working hours, salary, main duties and responsibilities, etc., key provisions such as overtime rules, codes of conduct, performance standards, promotion standards, and KPIs are often left out. This is where a staff handbook becomes beneficial, as they go into the finer and more individual rules of the company that all employees should be aware of. A staff handbook is an added layer of protection for the company and, while it is recommended for all foreign companies, it is especially crucial for growing companies with an employee count above ten.
China Clarifies its New Transfer Pricing Documentation Rules
On June 29, China’s State Administration of Taxation (SAT) issued the “Announcement  No. 42,” marking the beginning of a new era in China’s transfer pricing contemporaneous documentation administration. The Announcement contains rules governing the filing and management procedures of contemporaneous transfer pricing documentation, and is applicable to the accounting years starting from 2016. One of the major changes in the regulation is that it completely revises the country’s approach to transfer pricing documentation. The Chinese government will now introduce a three-tiered standardized approach to transfer pricing documentation for the first time, including: Master File & Local File, Country-by-Country Report (new), and Special File.
By Jake Liddle
The Chinese government has issued new dietary guidelines recommended by the country’s Health Ministry, which aim to reduce the country’s meat consumption in half by 2030. China consumes around 30 percent of the world’s meat, including half of its pork, even though average per capita meat consumption is half that of the average American or Australian. The guidelines recommend eating around 40-75 grams of meat per day, closer to recommendations made by the UK Department of Health.
Some commentators have pointed out that these guidelines have the potential to be instrumental in reducing the country’s greenhouse gas emissions. Globally, the livestock industry produces 14.5 percent of greenhouse gas emissions, totaling more than that of the global transport sector. If the guidelines are met and China’s meat consumption is reduced by 50 percent, one billion tons of carbon dioxide emissions could be cut. In addition, it would alleviate stress on land and water resources which would be significantly strained if meat consumption continues to increase at the current rate.