July 25 - In November 2007, the Ministry of Finance and the China Appraisal Society jointly announced an asset appraisal standards system, comprising 15 appraisal standards.

The standards system comprises two parts: professional ethics standards and business standards. The business standards are classified into four categories: basic standards, detailed standards, valuation guidelines, and guiding opinions. (more…)

July 8 - Over the last two months, China has tightened up its visa policies, drawing widespread concern from the business communities across China and in Hong Kong. Tourist visas now require round-trip air bookings and confirmed reservations at hotels in the destination city, students are having trouble obtaining visas to study in Beijing, and investors of all types have seen their F visa status weaken as round tripping to Hong Kong for renewal is now prohibited. The latest visa procedures to receive this tightening is the chief representative visa.

In the past, it was often common practice for a chief representative to arrive in China on an F visa, and then have their documentation and visa status changed in-country. According to the Public Security Bureau, that is no longer acceptable. Chief representatives must now obtain a Z visa in their home country before coming to China if they are a planning on residing in the country.

The procedure, and approximate time, for obtaining a visa as a chief representative is as follows (please note that these procedures do not apply to those from Macau, Hong Kong, or Taiwan): (more…)

July 4 - China is implanting a new system to control the inflow of speculative funds from abroad.

The rules state that starting from July 14, it will be mandatory for companies to provide evidence to the State Administration of Foreign Exchange for verification.

Exporters will be required to park their export receipts in temporary verification accounts till they are cleared as genuine trade revenue, according to a statement issued by the SAFE, the Ministry of Commerce and the General Administration of Customs.

The new rules are aimed at stopping overseas traders from inflating their invoices to bring in more foreign money, a common way of pushing overseas speculative capital into China. (more…)

July 1 - Metcalf & Q, the legal search practice, has just produced its annual guide to the best foreign law firms in Beijing. The firm interviewed over 100 lawyers in foreign firms in Beijing, asking them about their current practice, and the firms they would or would not like to work for. Metcalf & Q also asked what the interviewees felt was important in the firm’s work, such as positive and negative aspects of the job, management and leadership and comparisons with competing firms.

Of those interviewed, 2/3 of them were women, and of these 94 percent were Chinese lawyers. As mentioned, all incumbents were employed in foreign law firms. Positives for Chinese lawyers working for foreign firms were the general work atmosphere, with many firms demonstrating a friendly, cooperative environment. However, negatives were the poor integration of Chinese and foreign lawyers, and the poor integration of rainmakers and non-fee earning personnel.

While the former would tend to crop up in multi-racial firms, the latter is no real surprise. Neither too, is the complaint about long work hours, and poor work and life balance. Criticism here can be measured against performance driven packages and the fact that China is a hot destination. No surprise then that Chinese lawyers echo the same sentiments as lawyers elsewhere—it’s not exactly a profession guaranteed to provide an easy life, especially at the younger stages of career—and China only liberalized its legal profession a little over ten years ago. A useful statistic here would be a comparison of lawyers previously engaged in state-owned firms, and their lives now as corporate firms. (more…)

By Dezan Shira & Associates

June 17 - With the adjustment of China’s corporate tax base six months ago to a universal rate of 25 percent for all businesses, barring a few exceptions for encouraged industries, and the abolition of the profits tax breaks of manufacturing industries, many now mourn the passing of the “good old days” in China when foreign investors were largely financially encouraged to invest. At the time, local governments nationally went on a spree to attract them.

Not all of that investment was particularly good for China, and neither were some of the so-called incentives quite what they were cracked up to be either. China attracted a lot of investment that was bad for the country. It attracted inefficiency, outmoded industrial processes that were 30 years out of date in the West let alone China, industrial polluters, poorly treated work forces…the list went on and on. Foreign investors were largely free to bring to China, especially in manufacturing, old processes long discredited elsewhere. Cue an entire who’s who of exploiting businesses wanting to eke as much as they could both from an underpaid workforce and poor technology already long written off the books. China’s adjustment of the tax base and its insistence of higher standards of employment ethics concerning labor were specifically designed to curb the worst of these practices, and force them to either comply, or leave. The true cost of conducting business in China would now be levied.

The result has not been a dramatic slow down of FDI. In fact, quite the reverse – China’s FDI increased 50 percent as we noted here a few days ago, and international businesses are pouring in to invest as China’s middle class is now starting to buy global brands.

But what of the true cost of business, what of any new tax incentives? (more…)

Visitors and expatriates must complete full police registration procedures beginning July 1

June 5 - The Public Security Bureau issued new guidelines today to hotels and apartment management companies concerning the registration of foreigners in China, set to take effect July 1.

The PSB, a part of China’s domestic police force charged with policing public security and immigration residence registration and immigration affairs for foreigners, has insisted that the existing regulations for the registration of foreigners in China must be strictly adhered to. Violators and those who fail to report, be they individuals or building management, will be subject to fines the bureau has said.

Hotels and serviced apartments
Guests must be registered upon arrival with the PSB by the hotel and if separate, serviced apartment management company. Usually this procedure is automatic with input from the hotel being directly fed into the local PSB computer at the check-in procedure, with no additional action being required from the guest. However, daily checks are now in operation with the PSB physically visiting hotels to request copies of the hotels in-house guest list to make sure they match the PSB’s own records. If they do not, the hotel / serviced apartment will be fined RMB5,000 per missing entry. Hotel guests under these circumstances would not be fined. (more…)

June 3 - Moving from a representative office, long the business structure for sourcing from China, to legal entities that are able to sell in China as well as import and export products can be an important step for businesses looking to stay competitive in the global market.

This means either shutting down the existing RO, or keeping it going, and starting an entirely new legal entity. If an RO doesn’t suit the company’s needs, it should be closed. This closure can be implemented at the same time as the establishment of the new entity. In this article, we take a look at reasons for closing down an RO, and the steps needed to accomplish it.

Usually, ROs become unsuitable and may need to be closed down when: the holding company has closed down or changed business activities; the RO has not been operating in compliance with its business scope or the local regulations and should re-start on a clean sheet; the current location needs upgrading (bigger/smaller office space) or the company wants to move location, effectively changing the government agency regulating the RO; a local RMB billing entity is needed; the current RO business scope does not suit company requirements any longer; the company wants to upgrade their China entity. (more…)

June 2 - Chinese authorities are set to open the sluice gates of the country’s securities industry so that foreign companies can raise capital and list on the Shanghai stock exchange.

They also plan to allow local companies to scout globally for raising funds and listing in foreign stock exchanges, the Times of India reported.

China will let foreign investors take stakes in its publicly listed firms by buying their tradable A shares, part of an ongoing plan to do away with non-tradable State shares, according to Xinhua.

Foreign companies that want to take strategic stakes in listed Chinese firms will be able to do so by buying their non-tradable institutional State shares.

Under the State-share reform plan now being implemented, China is converting non-tradable shares, worth a collective US$250 billion, or about two-thirds of the total capitalization of China’s two stock markets, into regular tradable A shares. (more…)

May 29 - Companies looking to instill the Olympic spirit in their staff ahead of and during the forthcoming Games in Beijing may want to think twice on how they carry out the campaign. The French supermarket chain Carrefour has had to remove hats embossed with the Olympic rings from employees at its Chinese branches after the Beijing Olympic Organizing Committee for the Olympic Games (BOCOG) deemed them to be a copyright violation.

According to the Beijing Times, BOCOG demanded Carrefour stop using the caps after the committee concluded that the insignia was being illegally used.

“BOCOG said the Olympic symbol-embossed caps had a commercial agenda, and were in violation,” the paper quoted an unnamed employee at a Beijing branch, as saying on Tuesday. (more…)

May 29 - China moved on Tuesday to realign their telecom industry, hoping to promote competition in an industry that has become increasingly monopolized by China’s mobile operators.

Under the plan, China’s six state-owned telecom companies will be merged into three. China Mobile, will acquire the fixed-line operator China Tietong Telecommunications Corp, while China Telecom will take over one of China Unicom’s mobile networks, and most of the business of smaller player China Satellite Communications Corp. (more…)