Economy & Trade
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.
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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 email@example.com or visit www.dezshira.com.
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China Investment Roadmap: the e-Commerce Industry
In this edition of China Briefing magazine, we present a roadmap for investing in China’s e-commerce industry. We provide a consumer analysis of the Chinese market, take a look at the main industry players, and examine the various investment models that are available to foreign companies.
E-Commerce in Asia
Rising internet penetration, a growing consumer base, and rapidly developing logistics infrastructure contribute to burgeoning e-commerce activity in all three of China, Vietnam, and India. This report outlines the e-commerce markets in these countries and offers guidance on establishing a presence in these vibrant regions.
Selling, Sourcing and E-Commerce in China 2016 (First Edition)
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.
By Dezan Shira & Associates
Editor: Dominik Grossalber
The Dongguan of old, focused on the manufacturing of cheap, low-tech products, is currently transforming into a new, modern hub for the production of higher value goods. As this is happening, many established light manufacturing companies, sometimes present in the city for over 20 years, are moving away. This is part of a China-wide trend as the country seeks to move up the manufacturing value chain.
In 2015, Dongguan’s high tech manufacturing industry grew by 10.2 percent and automobile manufacturing grew by 8.5 percent, reflecting the growth of value-added manufacturing in the city. Meanwhile, textiles decreased by 4.3 percent and household electrical appliance manufacturing grew by just 2.4 percent, as lower value-added industries witnessed comparatively sluggish performance.
The Dongguan government has promised to support the shift to manufacturing higher value-added products and has targeted several strategic industries as a part of this effort, including high-end electronics, biotechnology, new-generation internet, and 3D printing. Additionally, Dongguan is seeking to become China’s center of robotics and automated manufacturing technology, positioning itself as a crucial spot of the changing landscape of Chinese manufacturing. While Dongguan’s new economic strategy is taking form, it is also interesting to look at why low-tech manufacturing is leaving in the first place and where it is going.
Chinese Infant Formula Market: Study Calls Foreign Brands ‘Less Suitable’ for Chinese Babies
A recent study conducted by the state run China Central Television has called on parents to buy domestically produced infant formula over foreign brands, due to levels of certain nutrients which do not meet the specific needs of Chinese babies. The study found that eight out of 19 popular foreign infant formulas from seven different countries contained varying amounts of nutrients were inconstant with that of Chinese nutritional standards, and that if an infant were to consume such formulas over a long length of time, could develop certain health problems. Findings concluded that these problems were based on differing nutritional standards of different nations, and urged parents to consider domestic brands. The study comes after an increasing amount of parents buying infant formula overseas via online retail sites, while domestic dairy farms are suffering significant losses.
Our Latest Round-Up of Business News Affecting China-Based Businesses Investing in Asia
In this edition of China Outbound, we start with the challenging corporate establishment procedure in ASEAN nations, with a focus on the South China Sea arbitration and its implications on ASEAN investors. From there, we move to an introduction to Vietnamese product labeling requirements, as well as the country’s new decree for investment violations. Lastly, we look into India’s business environment, highlighting its new insolvency and bankruptcy bill, and the revised reinsurance rules, which was re-drafted for the third time and is expected to create new hurdle for foreign reinsurers in India.