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What China Wants From India – Manufacturing Capacity

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CDE Op-Ed Commentary

The Foreign Ministers of China, India and Russia met in Beijing on February 2 at the 13th meeting of the RIC Summit, bringing together the three superpowers. Summarizing the meeting, Chinese Foreign Minister Wang Yi stressed the need for ”cooperation” and the need to promote regional economic stability and develop trade ties. I have discussed the situation concerning Russia and its new turn to face East in my earlier article Russia-China Trade to Boom in 2015, however what of the new detente between China and its most populous neighbor, India? Continue reading…

Wage Comparisons and Trade Flows Between China, ASEAN and India

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By Chris Devonshire-Ellis, Dezan Shira & Associates

As the cost of manufacturing in China continues to rise, the search for ever-more competitive products becomes increasingly important. While the China situation has an upside – the creation of a 600 million strong middle class consumer base by 2020 – the reality is that a combination of rising wages, welfare and operational costs is encouraging the Asian supply chain to move.

However, there are some important qualities about this shifting dynamic. With high productivity levels, China has largely proven itself as a capable manufacturer for global supply. The country has a relatively well-developed infrastructure – certainly along its coastline – when moving toward inland manufacturers. Although these do begin to deteriorate when moving toward inland manufacturers, the coastal regions remain a hotbed of global production and supply.

These locations, and the manner in which they have matched low wages and taxes with a well-constructed supply chain infrastructure, have served both the global consumer and foreign manufacturers in China for well over the past two decades. China’s cost-effectiveness has benefited foreign investors very well, to the extent that many MNCs have, over the years, moved an increasing percentage of their overall global manufacturing capability to the PRC. Continue reading…

Foreign IT Giants Rush to Tap China’s Cloud Computing Market

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cloud computingBy Rainy Yao

Cloud computing, commonly called “the third wave of information technology”, has substantially facilitated the way people live and do business. Generally speaking, cloud computing can be defined as the practice of storing data and running software over the Internet. Commercially, it allows enterprises to avoid upfront infrastructure costs and focus on their core business. 

China accounts for only two percent of the global cloud computing market, but this is fast evolving. China’s domestic cloud computing market expanded dramatically in 2014, thanks to government support and a fast-growing number of Internet users in the country. Cloud computing in China reached a market size of RMB 117.41 billion last year, nearly doubling compared to the previous year. A survey by S&P Consulting found out that about 60 percent of Chinese small and medium-sized companies were using cloud services in 2014. It is estimated that China’s cloud computing market will grow by at least 60 percent over the next few years and exceed RMB 354 billion by the end of 2016.

Continue reading…

China Regulatory Brief: VAT Reforms, Visa Requirements for Artists

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China Makes Announcement on VAT Reform Progress

On January 28, the State Administration of Taxation released a report on the country’s ongoing value-added tax (VAT) reforms and tax revenue statistics. According to the report, tax revenues had increased by 8.8 percent against 2013 levels to RMB 10.38 trillion (US$1.66 trillion). It is expected that the VAT reforms will be expanded to cover the construction, real estate and financial insurance industries by the end of 2015. The VAT reform, launched at the start of 2012, is a massive reform to replace business tax with VAT, two of the country’s three major indirect taxes. Currently, most of the modern service sectors such as rail transportation and postal services are covered under the VAT regime. Continue reading…

China Outbound: FATCA Reshapes FDI Flows Through Singapore and Hong Kong, Sourcing from India and Vietnam

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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 look at the complex dynamics affecting foreign investment into Asia as a result of the United States’ ongoing fight against international tax evasion through its FATCA legislation. We describe how FATCA is being implemented in two of Asia’s major springboards for FDI – Hong Kong and Singapore – and give our reasons for endorsing the growing competitiveness of the latter. Elsewhere, we compare investment vehicles for sourcing throughout Asia, and cast a spotlight on Vietnam’s technology sector, as well as India’s potential for trade in medical devices and wine.

Using China’s Free Trade & Double Tax Agreements – New Issue of China Briefing Magazine

The newest issue of China Briefing Magazine, titled “Using China’s Free Trade & Double Tax Agreements,” is out now and available as a complimentary download in the Asia Briefing Bookstore through the month of January.

American Business Problems with Hong Kong Bank Accounts? Singapore as an Answer

Given the recent problems American trading companies are having in establishing bank accounts in Hong Kong, alternatives need to be found. Singapore presents the most viable option available to foreign investors for a host of reasons, says Chris Devonshire-Ellis in this op-ed. Continue reading…

Setting up an Advertising Company in China

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By Dezan Shira & Associates
Legal Editor: Steven Elsinga

As China’s consumer market is expanding, demand for Western products is growing rapidly. Hand in hand with this development is the ever-increasing use of advertising to reach the rising Chinese middle class. In the first of this three part series, we explain how a foreign investor can set up an advertising agency. The second article will shed some light on the rules and regulations that apply to advertising your products in China. We wrap up the series with a discussion of the recently released draft Advertising Law, of which the current version dates back to 1994. Continue reading…

Paying Foreign Employees: Individual Income Tax

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By Dezan Shira & Associates
Editors: Steven Elsinga and Zhou Qian

For foreigners working in China, determining the applicability of individual income tax to one’s situation involves decoding a set of intersecting criteria and rules. Following this, you will need to calculate your precise liability and any applicable deductions. Lastly, consulting with a China taxation specialist can help optimize one’s overall income to achieve the most profitable pacakge for you or your employees.

China’s Individual Income Tax Law recognizes eleven different categories of income, with a host of different deductions, tax rates and exceptions applying to each of them. As our focus here lies with foreign employees, this article will only address the tax treatment of employment income, including salaries, bonuses, stock options and allowances. Continue reading…

Delegation in Your China Business: Managing Chops and Key Personnel

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arms-crossed-bow-tie-braces-1702By Dezan Shira & Associates 
Legal Editor: Steven Elsinga

In any business, one person delegates power to another to look after his/her interest. But how to ensure the latter doesn’t abuse this power for his/her own benefit is a classic dilemma known as the agency problem. It is as pressing an issue in China as in any other country, but Chinese laws and practices deal with this problem differently than most. For the foreign investor, this brings along a number of issues to be aware of. Continue reading…

Asia Briefing Bookstore Catalogue 2013
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