May 22 – The Dragon Boat Festival, a traditional Chinese holiday where teams of athletes compete against each other to row a specially designed boat down a river, will be celebrated on June 8.

In an attempt to bolster traditional Chinese culture, the central government late last year made the day a national holiday, and most businesses and government offices will be closed on June 9, making a three-day weekend.

China’s revised national holiday plan, shortened the May 1 golden week holiday and allocated days for the traditional Chinese holidays Tomb-Sweeping Day, the Dragon Boat Festival and the Mid-Autumn Festival. (more…)

April 23 - China has released the latest draft of its food safety laws that will mete out penalties ranging from fines to life imprisonment for those found guilty of producing substandard food.

The public is being encouraged to voice their opinion on the draft law on the NPC website until May 20.

In a new government initiative, all draft laws are now subject for public comment to allow more participation in politics and new legislation.

“In principle, all draft laws submitted to the National People’s Congress Standing Committee for review will be released in full text to solicit public opinions,” the NPC Standing Committee stated in a press release. (more…)

Updated edition contains new laws and regulatory issues affecting China JVs

China Briefing has just published a new, updated edition of the successful “Setting Up Joint Ventures in China.” Priced at US$25 (RMB200) plus p&p, the handbook is available from sales@china-briefing.com or from our bookstore via credit card payment here.

Details of contents are as follows:

Chapter One
Devising your China investment strategy
Options concerning foreign investment vehicles
JVs versus WFOEs – Working out what’s best for you
JV regulatory issues and implementation rules
Encouraged industry applications (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…)

HONG KONG, April 8 - China has stopped issuing multiple-entry visas and slowed the processing time for single- and double-entry visas for foreigners in Hong Kong.

Amid growing instability in Tibet and with the Olympics right around the corner, the Chinese government appears to be stepping up restrictions on foreigners entering China from Hong Kong, long a major gateway to the mainland.

According to travel agencies in the region, applicants are only being issued single-entry visas, with double-entry visas only being issued if airline tickets or detailed itinerary can be provided explaining why two entries are required during the same trip. The duration of stay for either single- or double-entry visa is 30 days. (more…)

Regulatory environment and existing partner infrastructure key decision drivers

By Chris Devonshire-Ellis

Mar. 18 – Recent comments on our and various other sites recently have sparked debate about the suitability of Joint Ventures and Wholly Foreign Owned Enterprises (WFOEs) as investment vehicles for foreign investors in China. While such debate has ranged from the somewhat ludicrous demand to “Name ten successful JVs in China!” to the more sublime, many salient points have been missing from a constructive debate. In this piece I will try and make a sensible case for both and the main guidelines to look at when faced with a decision between the two.

Regulatory environment
In all of China’s big ticket investment area, and certainly its restricted industry sectors, having a JV partner is mandatory. There are a number of reasons for this, related mainly to political and strategic sensitivities over certain industrial sectors over which China either wants to maintain control or to keep a close eye on. These include mining, aerospace, oil and gas,, other energy production and distribution fields, education, much of the medical industry, amongst others. Much of these investments are often structured as bilateral government to government investments in any event, with the partner companies merely executing the governments wishes. Others may be more corporate to government. However, faced with such issues, when a JV partner is mandatory that is the law and if you wish to play in this industry sector, you must have a JV partner. You have no choice. We will come back to managerial aspects of such ventures later. (more…)

Law there to protect workers from abuse, should not be seen as attempt to burden foreign investors with additional liabilities

BEIJING, Mar. 11 - The Chinese Vice-Minister of Labor, Sun Baoshu stated yesterday that manufacturers were wrong to blame the new Labor Contract Law for the rising cost of production in China, and that certain media reports by “unqualified foreign lawyers” that the law was designed to inflict additional costs and litigation on foreign businesses operating in China were groundless and could be traced back to “a desire to generate fee income from naive clients who buy such misguided stories.”

Certainly the labor law has not been without its critics, even within the National People’s Congress. However Sun rejected calls to amend certain parts of the legislation, and stated the labor law issue now had the full support of the law. Zhang Yin, one of China’s wealthiest businesswomen and operating a chain of restaurants with some 20,000 employees, had called for the NPC to amend the clauses concerning open-ended contracts and replace it with fixed term contracts. Sun replied that the provision that employers were required to sign open-ended contracts with staff did not mean employers were offering them an “iron rice bowl.” Employers were free from such conditions if the employee was incapacitated, broke company rules or was convicted of a criminal offense he mentioned. (more…)

JVs seen as China development refinancing and cost effective investment vehicles by many multinational investors

By Chris Devonshire-Ellis

Mar. 10 - JVs are still a primary choice for foreign investors wishing to manufacture and sell onto the Chinese market.

While recently, foreign legal media has appeared to dismiss China JVs as potential for problems and partner abuse, in contrast to widely held beliefs, JVs rather than wholly foreign owned enterprises (WFOES) still account for the majority of FDI income into China as investment vehicles of choice.

Many of these, especially in banking, finance, energy, exploration and power have been highly productive and lucrative dividends are being made to the shareholders of such companies. Certain manufacturing units also, especially in the automotive industry have shown an increase in profitability, with foreign-invested joint ventures responsible for funding additional operations in China thanks to tax incentives being available to re-invest dividends back into China. 

JVs still represent an excellent method for investment into China, however, certain factors do have to be in place to make such an investment correctly. (more…)

HONG KONG, Feb. 27 – In his annual budget speech, Financial Secretary John Tsang announced a host of changes amounting to HK$75 billion tax reductions.

While legislative amendments are required for implementing each of the relief measures proposed in the budget, the changes should provide a boost to the territory’s economy. Here’s a look at some of the major changes:

Individuals subject to Salaries Tax or Tax under Personal Assessment
Individuals subject to Salaries Tax or tax under Personal Assessment will enjoy a reduction of 75 perrcent of the final tax for the year of assessment 2007-08, subject to a ceiling of HK$25,000 per case.

The basic allowance and single parent allowance will be increased from HK$100,000 to HK$108,000, and married person’s allowance from $200,000 to $216,000.

Tax bands will be widened from HK$35,000 to HK$40,000 each.

Businesses subject to Profits Tax
Businesses subject to Profits Tax will enjoy a reduction of 75 percent of the final tax for the year of assessment 2007-08, subject to a ceiling of HK$25,000 per case. (more…)

Definitive handbook to China M&A law and transaction processes

BEIJING, Feb. 27 - China Briefing has just published the new 106 page China M&A guide, covering the full mergers and acquisition process in twelve chapters.

Authored by seven staff of the legal and audit teams at Dezan Shira & Associates, the book was jointly written by Chris Devonshire-Ellis, Richard Hoffmann, Charles Racine, Edward Ma, Zoe Zhou, Joyce Jin and Ronin Lu, and edited by Sam Woollard. The book includes information on China’s M&A environment, legislation on China M&As as they affect privately held companies, foreign invested companies, state owned enterprises and listed companies in China. The M&A transition structure is fully discussed, as well as the acquisition process. Also included is extensive coverage on legal, operational and financial due diligence issues.

An entire chapter is devoted to valuations, as well as negotiation strategies, the purchasing procedures of buying bankrupt assets, buying at auction, labor issues and tax planning. The final chapter is on common mistakes, an appropriate end to what will become a popular handbook on the subject. (more…)