Author Archives: China Briefing

Shanghai Raises the Stakes to Attract Multinational Headquarters

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SHANGHAI — With a recent set of provisions, Shanghai has pushed further ahead in the competition among China’s first-tier cities to attract multinational corporations (MNCs) to set up their regional headquarters in the city. On July 14, the Shanghai Municipal Commission of Commerce, Shanghai Human Resources and two other related Shanghai departments jointly released the “Supplementary Provisions on Encouraging the Establishment of Regional Headquarters by Multinational Corporations (Hu Shang Wai Zi [2014] No. 348),” which took immediate effect and will be valid for five years. Continue reading…

McDonald’s, KFC Scandal Exposes Limits of Foreign Reputation for Food Safety in China

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Op-Ed Commentary: Matthew J. Zito

What do milk, meat and dog treats have in common?—For one, each has been the subject of a recent food safety scandal in China. In the most recent incident, a meat and poultry supplier to McDonald’s and Yum Brands (KFC, Taco Bell, Pizza Hut) outlets in China was revealed to be using expired meat in the production of burgers and chicken products.

The seemingly unending string of such incidents, in addition to giving one a certain queasiness of the stomach, also exposes the complex workings of brand reputation in China and the economic and political forces bearing upon it. One thing is clear: gone are the days when foreign brands could rely on a reputation for quality merely by virtue of their foreignness. Continue reading…

China Regulatory Brief: Service Fee Standards Relaxed & BRICS Bank Headquartered in Shanghai

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BRICS Development Bank to Set Up Headquarters in Shanghai

On July 15, the five finance ministers of BRICS (Brazil, Russia, India, China and South Africa) signed an agreement on the New Development Bank (NDB) during the 6th meeting of BRICS national leaders. The NDB, designed to finance infrastructure projects in BRICS and other emerging nations, will have an initial subscribed capital of US$50 billion, contributed in equal shares of US$10 billion by its 5 member states. The bank will be headquartered in Shanghai and its initial presidency held by an Indian national. Continue reading…

A New Line of Work: Changing the Business Scope of a Company in China

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By Matthew Zito and Maria Kotova

SHANGHAI – Companies evolve. Whether through natural expansion or midlife crises, sometimes it becomes necessary to branch out into something new. In China, a company’s operations are defined by its business scope, a one-sentence description of the industry(s) it is authorized to operate in. Therefore, any significant change to company operations must be preceded by a registered change of business scope.

For simplicity, in this article we assume that the foreign-invested enterprise (FIE) in question is a wholly-foreign owned enterprise (WFOE). WFOEs are categorized as one of three types—Service, Trading, or Manufacturing—which differ in terms of their eligible business scope and corporate establishment procedure. Generally, it is much easier to register a change of business scope within one’s existing WFOE category, rather than expand from a Service WFOE into a Manufacturing WFOE, for example. Continue reading…

Finding Your “Comfort Zone”: A Guide to Industrial Parks in the Yangtze River Delta (Part 2)

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By Rainy Yao

SHANGHAI — Over its four years of development, the Yangtze River Delta (YRD) Economic Region has taken a leading role in China’s economy. In 2013, the region’s GDP was close to RMB10 trillion, accounting for 17.2 percent of national GDP. Attracted by potential revenues and preferential policies, more and more foreign investors have chosen to establish their businesses in the YRD, especially in its many development zones. But given that these zones vary in terms of the tax policies and investment environments they can provide, it can be hard to tell which is right for your business. In this second part of our two-part series, we continue with our comparison of five major types of development zones in the YRD to help foreign investors find the best fit for their specific industry. Continue reading…

Shanghai Chosen as Site of BRICS Development Bank

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SHANGHAI — Things came down to the wire in Brazil this week—not in the World Cup final but for the details of a development bank to be jointly funded by BRICS (Brazil, Russia, India, China and South Africa). In the end it was confirmed that the bank, aptly named the New Development Bank (NDB), would be headquartered in Shanghai and its initial presidency held by an Indian national. The move is widely expected to bolster Shanghai’s bid to become an international financial center by 2020.

The NDB, designed to finance infrastructure projects in BRICS and other emerging nations, will have an initial subscribed capital of US$50 billion, contributed in equal shares of US$10 billion by its 5 member states. Voting rights will be split between the five founding members and decisions made via a two-thirds majority. Although membership will be open to future additions, it is stipulated that BRICS must retain a controlling stake of at least 55 percent. Continue reading…

What China’s Latest Anti-Corruption Campaign Means for Foreign Investment

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SHANGHAI – It has become common practice in China that every major leadership transition be swiftly followed by an anti-corruption campaign, and the last leadership change in March 2013 has certainly proven consistent. President Xi Jinping’s campaign to crack down on “both tigers and flies”— high-ranking officials and lower-level bureaucrats—has adopted a forceful approach to the issue and grown into one of the broadest anti-corruption campaigns in recent memory. Continue reading…

Finding Your “Comfort Zone”: A Guide to Industrial Parks in the Yangtze River Delta (Part 1)

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By Rainy Yao

SHANGHAI — The Yangtze River Delta (YRD) Economic Region, comprised of 16 cities (i.e., Shanghai, Nanjing, Suzhou, Wuxi, Changzhou, Yangzhou, Zhenjiang, Nantong, Taizhou, Hangzhou, Ningbo, Huzhou, Jiaxing, Shaoxing, Zhoushan and Taizhou) in Zhejiang and Jiangsu provinces, is the largest megaregion in the world. In 2010, the State Council released the “Yangtze River Delta Regional Plan,” promoting the YRD as a key international gateway for the Asia-Pacific region, as well as an important global center for the modern service and manufacturing industries. The Plan establishes a target per capita GDP in the region of RMB110,000 by 2020. Continue reading…

Asia Briefing Bookstore Catalogue 2013