By Alexander Chipman Koty
China and the US agreed to a trade deal on May 11 that will give US firms in certain industries increased access to the Chinese market. The deal is a result of the 100-day plan to resolve trade disagreements that Chinese President Xi Jinping and US President Donald Trump produced at their April meeting at the Mar-a-Lago estate in Florida.
Most of the provisions have a July 16 – the 100th day of the plan – deadline for concrete guidelines. The agreement benefits US beef producers, credit rating services, and credit card providers, among others, while Chinese cooked poultry producers can now sell their products to the US.
China and India are increasingly consuming global brands and foods in tandem with their rapid development. The two countries are, after all, the largest and fastest growing economies in the world, and account for one-third of the world’s population. Together, they also host two of the world’s most rapidly developing consumer markets.
Key drivers shaping this consumer market growth is the increasing GDP and greater consumer spending power in these countries, which in turn facilitate rapidly changing lifestyles, a growing aspirational middle class, and rising interest in health and wellness.
President Xi Jinping’s “Belt Road Forum”, the highest profile Chinese diplomatic event of 2017, has just finished. It attracted 29 foreign heads of state and government and representatives from more than 130 countries and 70 international organizations. What did we learn?
There are a number of interesting takeaways. Firstly, though Xi is taking personal credit for the initiative, it is in fact a continuation of proven Chinese state policy, a logical continuation of Deng Xiaoping’s policy of “openness”, and Jiang Zemin’s motto “to go outside”. As such, the expansion into OBOR could have been predicted.
Secondly, although it’s rather stating the obvious, as China grows, it needs more markets and more raw materials. This basic need has essentially been given a new set of clothes – the One Belt, One Road initiative.
By Dezan Shira & Associates
Editor: Weining Hu
Fapiao is the first Chinese word many foreign businesspeople learn when they visit China. A fapiao is a legal receipt that serves as proof of purchase for goods and services. The larger fapiao invoice system, however, is an essential component of China’s tax law, and compliance for businesses.
China’s tax authorities require businesses to use fapiao to compel companies to pay tax in advance on their future sales. In this way, fapiao serve as a paper warranty against tax evasion, unlike other countries where invoices serve as a tax receipt.
The State Administration of Tax (SAT) prints, distributes, and administers fapiao. These authorities then require all businesses to purchase relevant fapiao, according to their business scope.
Foreign businesspeople and companies should take the time to understand the fapiao system: individuals need fapiao to reclaim business expenses, while companies must record all business transactions on a fapiao. A solid understanding of the system is therefore a critical requirement.
AirAsia sets up budget airline joint venture based in Zhengzhou with Everbright Group
Malaysian airline AirAsia has signed a memorandum with state-owned financial service provider China Everbright and the Henan Government Working Group to form a joint venture in Henan province’s Zhengzhou.
The low cost carrier chose Zhengzhou as its base due to its strategic positioning and status as a logistics hub for China’s burgeoning western regions, and is a city that will undoubtedly become even more important as the One Belt, One Road project matures.
Our weekly round up of other news affecting foreign investors throughout Asia:
Biomass Industry in the Philippines
The Philippines has large and abundant supplies of biomass resources, including agricultural crop residues, forest residues, animal waste, and agro-industrial waste. Our Philippines correspondent Bob Shead discusses the economic advantages of biomass power generation in the Philippines in this Op-ed.
The RERA Act – An Explainer
India’s ambitious Real Estate (Regulation and Development) Act, 2016 (RERA) came into force May 1, 2017. In this article, we highlight the Act’s major rules and discuss its implications for key stakeholders as well as the challenges in its implementation under respective state governments.
By Zolzaya Erdenebileg and Weining Hu
Made in China 2025 (MIC 2025) – an initiative to transform China into a hub for advanced manufacturing – has been met with curiosity, and some confusion, by observers since it was unveiled in 2015.
The international business community is curious about how effective the policy will be. Many wonder whether MIC 2025 will end up like Germany 4.0, which was successful in increasing Germany’s national industrial capacity, or Make in India, an initiative to encourage manufacturing in the country, which has not fully lived up to expectations.
By Alexander Chipman Koty
The Cyberspace Administration of China recently released the Measures for the Security Assessment of Personal Information and Critical Data Leaving the Country (the Measures), which regulates the transfer and storage of personal information and data leaving China. The Measures are part of China’s expansive Cybersecurity Law (the Law), which will come into effect on June 1.
Although the Measures are designed to aid in the implementation of the Law, they raise fresh concerns for foreign companies in China that store information overseas. In particular, stipulations governing the collection and storage of “personal information” could pose a challenge for foreign companies that centralize their HR operations for China-based employees outside of the country.