May 5 - China’s trade with the Association of Southeast Asian Nations increased to US$54.4 billion in the first quarter of 2008, a 26 percent increase over the same period last year, sources with the Ministry of Commerce reported on Friday.

According to Xinhua, bilateral trade reached US$202.5 billion last year, representing a year-on-year increase of 26 percent and achieving the trade target of US$200 billion three years ahead of schedule.

Besides trade, two-way investment, contracted engineering and labor cooperation between China and ASEAN members have developed rapidly. (more…)

By Andy Scott

WUHAN, April 28 - The Expo Central China 2008 came to a close today in the city of Wuhan, the provincial capital of Hubei province. The third of its kind, the expo is an opportunity for the Central China provinces of Anhui, Henan, Hubei, Hunan, Jiangxi and Shanxi to attract investor attention to a region that has historically lagged in development behind China’s coastal provinces. As investor sentiment has waned for China’s coastal regions where the rising costs of doing business are beginning to force large corporations to rethink their China strategy, the Central China region, and especially Wuhan with its perfectly centered location in China, is looking to take advantage. Long considered a secondary market, the completion of the new, expanded Wuhan Tianhe International airport as well as the continued dredging of the Yangtze downriver is turning Wuhan into destination for foreign investment.

The expo’s theme focused on the region’s belief that industry inside China is indeed beginning to shift, and the main focus of many of the provincial officials at the expo was directing inbound investment from the coast. At the opening ceremony, Vice-Premier Wang Qishan stressed that the region needed further reform and opening-up, stressing awareness of reform, innovation, and the rule of law as keys. (more…)

Fundamental dynamics in understanding RMB purchasing power is key

April 28 - Jack Perkowski of Asimco fame has been in the press a lot recently, not least because of the launch of his new book “Managing The Dragon : How I’m Building a Billion-Dollar Business in China.”

We caught up with him at the YPO event in Beijing last week where he was one of the guest speakers. In his presentation, he told of how he came to China, and began to build his company. In doing so, he made an interesting observation about staffing a business in China. Taking from his pocket a US$100 bill and a RMB100 bill, he then considered the similarities:

* Both are the highest value note in their respective countries
* Both feature previous national leaders on their front
* Both employ similar anti-forging technology with ultraviolet lights, a metal strip and dual colored inks.

Yet, as he pointed out, Americans by and large do not feel US$100 is a lot of money. But Chinese view RMB100 as a lot of money, despite the fact that at current exchange rates, the RMB100 is worth just US$14. (more…)

April 22 - Starbucks plans to open at least 80 outlets in China this year as consumers in the most populous country boost spending.

The world’s largest cafe chain has more than 300 stories in China and plans to hire thousands over the next two years in to support the planned expansion, the company’s greater China president, Wang Jinlong told Bloomberg TV. According to Wang, the company currently has 4,000 employees in China.

Starbucks has long viewed the large potential of the Chinese market with interest, and the improving standard of living in China’s first- and second-tier cities, as well as a growing taste for coffee are both viewed by the company as a large, untapped potential.

According to Bloomberg, China’s per-capita urban disposable income rose 16.2 percent in 2007, the seventh year in a row the number increased by more than 10 percent. (more…)

Practice now has three offices in Shanghai’s Yangtze River Delta and nine nationally

NINGBO, April 16 - Dezan Shira & Associates, the specialist foreign direct investment firm, has opened an office in the port of Ningbo, on China’s Eastern coast just south of Shanghai.

The practice, which provides legal, tax and due diligence advice to multinationals throughout China, Hong Kong, India and Vietnam, has maintained a large regional office in Shanghai for 14 years and a year ago established a branch in Hangzhou, the capital city of Zhejiang province and situated between Shanghai and Ningbo.

“Business in Shanghai is becoming highly competitive and many companies are more price sensitive than was previously the case,” says Olaf Griese, the firm’s regional manager. “As Shanghai moves more towards becoming a center for services, cities such as Ningbo are developing rapidly and are a major draw to foreign manufacturing investors looking at accessing Shanghai’s wealth yet without the higher cost.” (more…)

SHANGHAI, April 14 - Don St. Pierre Jr., named the 37th most influential wine person globally, was recently released in Shanghai following a month-long detention and a major investigation of his firm’s wine importation business.

St. Pierre was being held as part of an extensive investigation of wine importers by the Chinese authorities looking for evidence that importers had been understating the value of wines they bring into the country in order to evade high customs duties in the growing Chinese wine market.

St. Pierre Jr., the company’s managing partner, and ASC vice president Carrie Xuan had been held in a customs department building, though neither was officially under arrest.

“The way the system works here is that they detain you while figuring out what to do,” said his father Don St. Pierre Sr. to the industry publication Wine Spectator. St. Pierre Sr., who has been doing business in China for 20 years, founded the company a decade ago with his son and currently serves as chairman. “There are 27 boxes of documents that have to be matched up with other pieces of paper to show that customs duty has been paid,” he said last week, prior to his son’s release. ”They have been going through them for three weeks now and found there is nothing wrong.” (more…)

GUANGZHOU, April 14 – According to the China Import and Export website, registration regulations for foreigners to attend the 103rd session of the annual Canton Fair have been revised.

In order for foreigners to register, a new five step process has been implemented in the attempt to make the Canton Fair a safe trading environment for all attendees according to information provided by the event’s organizers.

The new and updated procedure is as follows: (more…)

April 11 – China and New Zealand signed a free trade agreement on April 7 in Beijing, a culmination of three years of talks between the two nations.

Signed in the Great Hall of the People, the agreement marked “the culmination of fifteen rounds of negotiations over three years,” New Zealand Prime Minister Helen Clark said.

The agreement, which is scheduled to be implemented October 1, is the first between China and a developed country. “Being the first developed country to sign a comprehensive FTA with China is an enormous achievement for New Zealand,” said New Zealand Trade Minister Phil Goff.

The ceremony, also witnessed by Chinese Premier Wen Jiabao and Prime Minister Clark, marked the beginning of a partnership for the two countries. Early on in the talks, which began in December 2004, Wen had suggested the signing of the agreement would “further the friendly and cooperative relations between the two countries, promote each’s economic growth, and bring practical benefits to the two peoples.” He described the event as “a day of historical significance” and said the move “met the goal” the two countries set during negotiations. (more…)

Fujian, Zhejiang and Northern Vietnam main new destinations for low end sourcing / manufacturing

SHENZHEN, April 11 - South China, long the country’s epicenter of low-end manufacturing and sourcing, is seeing a massive slowdown in new investment as companies look to move further inland and elsewhere.

Dezan Shira & Associates, which has maintained offices in the region for 16 years, reports that its clients’ foreign direct investment (FDI) in South China has seen a steep decrease in the first quarter of 2008. The findings, part of the firm’s first-quarter national assessment of FDI in China, represent the first large-scale decline in the region, with Guangdong province among the hardest hit. Inbound FDI to Shanghai and the Yangtze River Delta, or the Beijing-Tianjin corridor, remains strong.

“What we are seeing in South China is a massive change in the nature of the business environment here,” says Chris Devonshire-Ellis, the firm’s senior partner.

The flagging investment, says Devonshire-Ellis, comes amid a government push to attract added-value businesses and more hi-tech industry, including the development of the Shenzhen Hi Tech Zone. However, new foreign investors in high-tech by and large haven’t yet seen the opportunities here and remain aloof, opting instead for Shanghai and Hangzhou. (more…)

Updated guide “Setting up Representative Offices in China” now available

April 10 - The brand new, updated version of our popular guide to setting up representative offices in China is now available. This is the most up-to-date published information currently available on the subject and includes regional variations in the application procedures and tax reporting obligations.

Chapter One
Establishing representative offices
Application procedures and flow chart
RO applications – common mistakes

Chapter Two
Staffing the RO
General issues
Sample labor contract
Dismissing employees
Expatriate individual income tax (more…)