Economy & Trade
By Alexander Chipman-Koty
As Philippine president Rodrigo Duterte wraps up his controversial state visit to China, his string of inflammatory comments has continued and intensified, drawing concerns from foreign investors throughout emerging Asia. Known for his crude insults directed at world leaders and comparing himself to Adolf Hitler in his drive to eliminate drug dealers and users from the country, Duterte is now raising eyebrows for his explicit rejection of the U.S. – historically the Philippines’ most important ally – in favor of China’s rising might.
China to fully open elderly care market to private investment
China has announced plans to ease restrictions in the elderly care market in order to channel more private capital into the sector. Market access thresholds will be lowered, and state run elderly care institutions will be reformed as part of the measures. Improving and developing the elderly care sector has been identified as a pressing topic by the state, as China’s elderly population has already surpassed the international standard of defining an aging population, which is held at 10 percent of the population over the age of 60. At the end of 2015, China had 222 million citizens over the age of 60, over 16 percent of the population. This percentage had already passed the 10 percent threshold in 1999. It is estimated that total spending on the elderly care will reach RMB 5 trillion by 2050.
China’s cement firms to consolidate by over 50 percent by 2020
60 percent of China’s cement capacity is to be consolidated into 10 of the country’s top production companies by 2020. There are around 3500 cement producers in China, and the country’s Cement Association has petitioned to speed up the consolidation process, which will involve numerous closures of cement plants and mergers. This will require existing cement producers to jointly pool RMB 20 billion into a restructuring fund, with many commentators suggesting that the top production companies should contribute the most. China accounts for around 60 percent of global cement production, and is one of the industries suffering from serious overcapacity along with the steel and coal industries. The industry is required to cut 390 million tons of capacity, and 130,000 jobs over the next five years in order to reach a balance between supply and demand.
By Dezan Shira & Associates
China is currently experiencing huge growth in its e-commerce industry. In this podcast interview by AustCham, Sabrina Zhang, China National Tax Partner at Dezan Shira & Associates’ Beijing office, discusses the e-commerce industry in China. During the discussion, you will learn more about the current state of e-commerce in China, licenses required and the latest changes and upcoming trends.
E-commerce, by definition, is the trading or facilitation of trading in products or services using computer networks. With the largest population of online shoppers in the world, China is becoming one of the most attractive markets for e-commerce operators. Even though e-commerce is not a concept defined in the Chinese law, various rules and regulations apply to foreign investors looking to sell products online. For example, foreign investors aiming to sell products via their own China-hosted website needs to first register a Foreign Invested Commercial Enterprise (FICE) and set up a physical store or a showroom. After that, they can proceed to register a website and complete the ICP filing procedure. FICEs seeking to provide services to other trading parties with their own online platform need to apply for an ICP license.
RELATED: Find more podcasts on Dezan Shira’s Knowledge Sharing Platform
As a general trend, the Chinese government is willing to open up the e-commerce market and further open up China’s economy to the world. In the long term, one of China’s current economic development goals is to promote domestic consumption, and e-commerce will play a significant role in this growth.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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Selling, Sourcing & E-Commerce in China 2016, produced in collaboration with the experts at Dezan Shira & Associates, provides a comprehensive analysis of all the aspects of commerce in China. It discusses how foreign companies can best go about sourcing products from China; how foreign retailers can set up operations on the ground to sell directly to the country’s massive consumer class; and finally details how foreign enterprises can access China’s lucrative yet ostensibly complex e-commerce market.
By Dezan Shira & Associates
On August 31, 2016, Beijing passed approval for Chongqing, Zhejiang, Hubei, Henan, Sichuan, Shaanxi, and Liaoning to establish seven new free trade zones (FTZs), bringing China’s total number to 11.
The decision to increase China’s FTZs by such a significant amount is widely seen as an effort to combat slowing economic growth in the Middle Kingdom, with 2015’s GDP growth of 6.9 percent the slowest in 25 years. As the country’s economy continues to diversify, the FTZs are also seen as a means to open up key markets and industries for foreign investment.
Chinese Telecom Providers to Scrap Domestic Roaming Fees
This July, China Telecom, China’s third biggest telecom provider, announced that it would cancel all domestic roaming fees. The country’s largest provider, China Mobile, as well as China Unicom followed suit shortly after. This move is expected to increase competition in the market, and drive telecom fees down, ending the monopoly that the three big telecom providers have consistently maintained in recent years. Currently, consumers are charged RMB 0.6-0.8 per minute for roaming services within the PRC outside of their local service area, double the standard charges, accounting for 10 percent of the company’s net profit. The ability to provide free roaming services stems from technological improvements, but also pressure from the industry regulator, the Ministry of Industry and Information Technology (MIIT).
By Alexander Chipman Koty
Traditionally overshadowed by metropolises such as Shanghai and Beijing in China’s international events, Zhejiang Province’s capital city of Hangzhou is finding itself in the global spotlight as it prepares to host the upcoming G20 Summit. Hangzhou has made considerable press recently for the Chinese government’s intense efforts to beautify the city and ease congestion for its international guests, including by shutting down polluting factories, shipping away migrant workers, giving citizens vouchers to encourage them to vacation, and spending over US$1 billion on a new convention center. Despite these vast efforts, Hangzhou’s allure is not simply cosmetic. While China’s growth is slowing as its immense manufacturing sector struggles, Hangzhou continues to grow steadily on the back of its burgeoning high-tech industry, making it a model city for China’s broader economic transition.
China to Become the World’s Second Largest Insurance Market
China is expected to become the world’s second largest insurance market this year, overtaking Japan, owing to the rapid increase of the middle class. The China Insurance Regulatory Commission has reported that China’s premium income reached RMB 1.9 trillion in the first half, up 37.3 percent on the previous year. This growth rate has accelerated fast, compared to 17.5 percent in the first half of 2014 and 20 percent in the first half of 2015. There are now 330 million policy holders in China, triple that of stock investors, and with a lack of insurance companies and products, China’s insurance market has a lot of potential.