Economy & Trade

Closing Shop on China’s e-Commerce Platforms: Why Are Big Name Brands Leaving Tmall?

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By Zolzaya Edenebileg

It is old news that the Chinese market is highly competitive and unlike any other market in the world. What may sell on the high street in London is not guaranteed to sell in China. The rainbow-lensed promises of e-commerce seem to be an easy way to access China’s 770.4 million working population, 0.2 percent or over 1.5 million of which have an average income of US$500,000.

However, the online store closures of a number of retail and luxury brand giants indicate that the competition is no less fierce online.

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China Market Watch: Salt Prices Stable After End of State Monopoly, and RMB 30 Billion Fund for Services Industry

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Salt prices stable and low following end of monopoly

China’s National Development and Reform Commission has said that the price of salt commodities will remain stable and low due to salt stockpiles and overcapacity. There is so much salt in fact that, at the end of 2016, reserves of table salt reached 1.55 million tons. Rock salt reserves reached 1.3 trillion tons, enough to supply 26,000 years of continuous consumption at the current annual output, which is 50 million tons. In 2015, 10.5 million tons of table salt were sold. Starting from the first day of this year, China ended its 2000 year monopoly of the production and sale of salt, in which salt bureaus exploited the market to gain significant profit.

RMB 30 billion fund for China’s services industry

The Chinese government plans to set up an RMB 30 billion fund aimed at boosting high value service exports such as finance, technology and culture. The majority of the fund will derive from private investors, with the Ministry of Finance contributing RMB 5 billion. The fund will be made available for all sorts of companies, including state owned and private enterprises. The fund is the first of its kind in China, and forms part of the country’s drive to shift towards an economy based on service exports.  According to the Ministry of Commerce, China’s import and export and services reached RMB 4.29 trillion in 2016, with the tourism industry the biggest contributor. However, China only accounts for six percent of the world’s service trade.

Professional Service_CB icons_2015RELATED: Pre-Investment and Entry Strategy Advisory from Dezan Shira & Associates

New energy vehicles forecast good growth after subsidies cuts

January sales of new energy vehicles (NEVs) plummeted by 74.4 percent in January following a tightening in subsidies policies, after some companies were exploiting them. However, according to the China Association of Automobile Manufacturers, sales previous to this reached 507,000 in 2016, up 53 percent in 2015, and sales of NEVs are expected to maintain good growth this year. Although subsidies will be cut by 20 to 30 percent during 2017-2018, China’s development of NEVs is keeping up with the global market. Research and development is increasing with the inflow of investment, meaning that new products will come onto the market this year.

Mechanical industry reports strong growth  

China’s Machinery Industry Federation has reported that the country’s mechanical industry grew rapidly last year, mainly due to the fast developing automobile and electrical appliance segments. The automobile segment comprised nearly 60 percent of the industry’s revenue, recording increased profits of RMB 688.6 billion last year, up RMB 66.27 from 2015. Domestically produced cars sales increased by 20 percent, accounting for more than 40 percent of China’s overall car sales. The electrical appliance segment comprised 20 percent of the overall machinery industry. This year, particular attention will be paid to high end numerical control machine tools and intelligent equipment.


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Us

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 china@dezshira.com or visit www.dezshira.com.

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dsa brochureDezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.

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Doing Business in China 2017 is designed to introduce the fundamentals of investing in China. Compiled by the professionals at Dezan Shira & Associates in January 2017, this comprehensive guide is ideal not only for businesses looking to enter the Chinese market, but also for companies who already have a presence here and want to keep up-to-date with the most recent and relevant policy changes.


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Recent changes in China’s labor market have underscored the importance of having both an efficient HR system and a satisfied and reliable workforce, and the HR audit is a useful tool to ensure this. In this issue of China Briefing magazine, we provide a guide for conducting HR audits in China. We analyze why the HR audit is especially important for foreign companies operating in the country, and then detail the different HR audit models and procedures that are available to firms. 

Asia Investment Brief: FDI Opportunities in Laos, Tax Residency in India, and RO Establishment in Indonesia

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Our weekly round up of other news affecting foreign investors throughout Asia:

ASEAN BRIEFING

Electrifying Laos: Opportunities for FDI in 2017

Laos has posted strong growth rates for the past ten years, ranging between seven and eight percent. Here, we outline opportunities for FDI in 2017.

INDIA BRIEFING

POEM to Determine Tax Residency in India from April 2017

Learn about the finalized guidelines for Place of Effective Management (POEM) regulations in India, which will come into effect from April 1, 2017.

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Dezan Shira Reports Consistent and Strong Growth in Asia

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Chris Devonshire-Ellis

By Dezan Shira & Associates

Dezan Shira & Associates have reported consistent China growth in their practice and “significant” growth in their non-China Asian operations during 2016.

Speaking following the firm’s Partners Meeting in Shanghai this past weekend, Chairman Chris Devonshire-Ellis said, “Overall China growth for 2016 resulted in an increase in revenues”, while Asia operations year on year growth saw a significant increase in Vietnam, Singapore, and a substantial increase for India.

Devonshire-Ellis stated that while the US$-RMB exchange rate was a challenge throughout the year, the firm’s growth in China remained steady. He said the firm serves as a barometer for foreign investment flows into China as it possesses several thousand clients, a 25-year-old history in China, and 12 regional offices in China.

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Asia Investment Brief: The Philippines in 2017, India’s 2017 Budget, and Russian Trends and Opportunities

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Our weekly round up of other news affecting foreign investors throughout Asia:

ASEAN BRIEFING

Investing in the Philippines – What To Expect in 2017 

A combination of tax reforms and increasing growth are making the Philippines an attractive destination for foreign investment. We examine the parameters.

INDIA BRIEFING

India’s 2017 Budget – A Sober Initiative After A Heady 2016

Finance Minister Arun Jaitley consolidates, but benefits await for infrastructure developers.

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The China City & Industry Report 2017 – New Publication from U.S. Commercial Service with Content from Dezan Shira & Associates

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China city industry report US comm service cover 250x350The China City & Industry Report: A Guide for U.S. Exporters 2017, a new publication from U.S. Commercial Service, is now available through the Asia Briefing Publication Store for complimentary download. With content provided by the professionals at Dezan Shira & Associates and published by Asia Briefing, this 140 page guide provides a close look at 19 of China’s most commercially important cities and 16 of its best prospect industries for U.S. exporters, with focus on market demand, trade opportunities, and prospects for investors.

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China Market Watch: Holiday Outbound Tourism Surge and the Steel Sector’s Restored Growth

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China tourism revenue surges over Lunar New Year holiday

This year’s Lunar New Year holiday period saw a total of RMB 423.3 billion spent on tourism, a 15.9 percent increase on last year according to the National Tourism Administration. Outbound tourism increased, with around 6.15 million overseas trips by Chinese nationals, up seven percent. Travel website Ctrip recorded over RMB 100 billion on outbound tourism. Tuniu.com, an online travel agency also reported a similar boom, generating around 48 percent of its holiday business from outbound tourism, with Southeast Asian countries proving the most popular destinations. This trend is fueled by greater numbers of residents from rural cities looking to holiday abroad.

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China Regional Focus: Investing in Zhejiang Province

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As host of the 2016 G20 summit, Zhejiang province has been thrust into the global spotlight in recent months. The province of 55 million people is advantageously located on China’s east coast, south of Shanghai which is easily accessible via one of the world’s transoceanic bridges spanning the Hangzhou Bay. Zhejiang boasts advanced infrastructure, with 2,600 kilometers of railway, almost 120,000 kilometers of highway, and one of the top five busiest ports in the world. These factors, along with a rapidly developing business environment, have led Zhejiang to become one of the strongest and most diverse provincial economies in China.

A growing number of foreign firms are choosing Zhejiang as the location for their Chinese investments. The province offers great opportunities to potential China entrants, including a range of economic development zones. In order to take advantage of these opportunities, the economy of Zhejiang and recent foreign direct investment (FDI) trends must be understood.

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