Weathering China’s Cloud Computing Regulations

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By Dezan Shira & Associates
Editors: Jake Liddle and Alexander Chipman Koty

cloud computingLast summer, Chinese tech giants Tencent and Alibaba announced investments into cloud computing services worth US$1.57 billion and US$1 billion, respectively. In 2014, cloud computing sales accounted for only five percent of China’s total IT market compared to 11 percent globally, but Bains predicts this number to swell to 20 percent by 2020, reaching US$20 billion in value and representing an annual growth rate of over 40 percent.

Despite the positive outlook for cloud computing, China’s complex and restrictive regulations governing data and internet services make entering the rapidly expanding market a complicated process.

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China Market Watch: Sales of Domestic Brands Excel, While China Box Office Performs Badly in Q2 2016

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China Expected to Become World’s Main Cruise Liner Market

China is already the second largest cruise liner market for Royal Caribbean International, and the company’s chief executive, Michael Bayley, has predicted that China will soon overtake the U.S. to become the world’s largest. In a bid to preempt this growing demand, Royal Caribbean International’s newest ship, Ovation of the Seas, has been stationed in China’s northern port city Tianjin. Weighing in at 168,666 tons and measuring 348 meters long, the new liner can accommodate up to 4,900 passengers and 1,500 crew, offering cruises to South Korea and Japan from RMB 700-1,300 per night. According to the cruise economy research institute of the Shanghai International Shipping Institute, China is expected to deliver 4.5 million passengers by 2020.

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Out of the Scrapyard: How Foreign Involvement Can Help Solve China’s e-Waste Crisis

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By Samuel Wrest

Late last month, the United States Congress introduced a new bill aimed at stemming the country’s regular flow of electronic waste to China. The U.S. is one of many foreign countries that exports huge amounts of e-waste to the Middle Kingdom – albeit often unintentionally – contributing to the numerous health and environmental problems that such waste creates, and leading to e-waste becoming a source of Chinese counterfeit electronic goods that are fed back into the global market.

But China’s status as a dumping ground for the world’s e-waste is only a part of the problem, and increasingly a comparatively smaller one. China has in place a blanket ban on all e-waste imports, and although several loopholes exist that illicit exporters continue to exploit, the country is now producing greater amounts of e-waste domestically. Government programs and general recycling efforts to tackle the issue have proven either ineffective or outright dangerous, raising the question of whether foreign involvement can form a part of China’s e-waste solution.

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Strength in Numbers: Opportunities in China’s Sharing Economy

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By Cameron Turnbull

Advances in mobile technology and mobile app development have given rise to a new business model that has already had a profound effect on the transportation, e-commerce, and lodging industries. The sharing economy refers to third party online service providers that help businesses and individuals turn excess supply into revenue by linking them to consumers via various online platforms. With high levels of mobile use and a rapidly expanding consumer class, China has been quick to adapt to the sharing economy, presenting tremendous opportunities for those who embrace new technology and business models. Continue reading…

China Dismantles Controls of Yuan Conversion on Capital Account, Impacting Foreign Institutions

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By Dezan Shira & Associates
Editor: Mia Yiqiao Jing

After one year of China’s RMB conversion pilot program in its four Free Trade Zones, the government is ambitiously introducing the policy nationwide to all non-financial institutions, both domestic and foreign, to help internationalize the RMB, secure its evaluation, and stabilize foreign exchange rates. The new policy simplifies RMB conversion procedures and gives foreign institutions leeway to manage external debt or income on capital account.

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China Regulatory Brief: Consumer Tax Reform and Notice on Employment Subsidy for the Disabled

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Consumer Tax Reform to be Launched

Consumer tax is now undergoing a period of change following China’s VAT reform. Its scope of taxation is set to be adjusted, and the collection process and tax rate is expected to be accelerated. Certain high pollution and high energy consumption products, high-class consumer goods, as well as high-class services, will be included into the scope of collection of consumer tax. The collection process will transfer from a production process to a retail process. In addition, income from consumer tax is likely to be shared among local authorities from the central government.

Entrepreneurship and Internet to Boost Employment during the 13th Five-Year Planning Period

The Outline of the 13th Five-Year Plan pledges to implement an ‘employment first strategy’ and enact proactive employment policies in order to create more job opportunities. It will also address employment conflicts, encourage entrepreneurship-driven employment, and do more to increase better quality employment. For example, the service sector contributes 20 percent more to employees than the industry sector, and the plan aims to even out these proportions. In 2014, tertiary industries accounted for 40.6 percent of China’s total employment with around 310 million people. By the end of the 13th Five-Year Planning period, the service sector will potentially account for 50 percent of total employment.

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China’s Work-related Injury Insurance Scheme – Empowering Employees and Employers Alike

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By Dezan Shira & Associates
Editor: Mia Yiqiao Jing

Clarifying what constitutes a work-related injury has always been a difficult task for both employees and employers to claim legal rights. In China, problems usually arise from the time and location at which incidents occur, and to what extent they are related to work tasks, making legal processes rather complex for foreign employers and insurance agencies.

Occupational injuries and diseases, post-work death, and industrial accidents have generated the most number of law disputes regarding work-related injuries. Since much-publicized cases of Karoshi (death from overwork) at Dell in 2005 and at PwC in 2011, foreign organizations operating in China have been questioned on their abilities to protect employees from overwhelming workloads and to maintain sustainable development, an increasingly hot topic as China expands opportunities for foreign-invested enterprises to operate in the country.

In this article, we brief China’s regulation on work-related injury insurance with a comprehensive guide on conditions for qualification, benefit items, and suggestions for foreign organizations in China to minimize the risk of work-related injuries and law disputes.

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An Introduction to Doing Business in China 2016 – New Publication from Dezan Shira & Associates

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Intro Doing Biz China 16An Introduction to Doing Business in China 2016, the latest publication from Dezan Shira & Associates, is out now and available for complimentary download through the Asia Briefing Publication Store.

In the 30 years since Deng Xiaoping’s “reform and opening-up” policy of 1978, China’s GDP has developed at an unprecedented rate, averaging 10 percent growth per annum. However, the relentless momentum of investors turning their sights towards China has softened of late. A slowed GDP growth of 6.9 percent in 2015 – the lowest in 25 years – combined with stock market volatility has caused alarm among observers. FDI into China’s manufacturing sector, for example, came in at US$39.54 billion last year, a slight drop from 2014 (US$39.94 billion) and accounting for 31.4 percent of the total.

However, while some of these fears are grounded in reality, others are overblown. After decades of rapid growth and development, the Chinese economy is inevitably changing. The Middle Kingdom is undergoing a major overhaul, transitioning to have a service and consumption driven economy rather than one based purely on manufacturing and export. This transition is not unconditionally negative for the country’s competitiveness, and is understandably changing the way in which investors approach and operate in the country.

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