Economy & Trade

China Outbound: Financial Integration in ASEAN & Emerging Opportunities in Vietnam

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Our Latest Round-Up of Business News Affecting China-Based Businesses Investing in Asia

In this edition of China Outbound, we take a closer look at ASEAN nations’ financial integration progress, which has been on the regional agenda since the Asian financial crisis in 1997. From there, we move to a comparison between Singapore and Hong Kong as Asia’s financial hub. We highlight the promising opportunities in Vietnam’s emerging industries such as education and healthcare. Finally, we discuss the reason why India’s economic outlook remains positive despite a declining optimism towards emerging economies.

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Making Sense of China’s ‘One Belt, One Road’: Understanding Chinese Views

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By Kerry Brown and He Jingjing

One of the challenges of trying to make sense of the ‘One Belt, One Road’ strategy (OBOR, in Chinese `yi dai yi lu’一带一路) has been to work out what the idea is trying to express in the first place, at least as it is understood within China. In March 2015, the State Council issued an action plan, in which it stated that the idea was principally aimed at encouraging:

The orderly and free flow of economic factors, highly efficient allocation of resources and deep integration of markets; encouraging the countries along the Belt and Road to achieve economic policy coordination and carry out broader and more in-depth regional cooperation of higher standards; and jointly creating an open, inclusive and balanced regional economic cooperation architecture that benefits all.

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China Market Watch: Business Jet Sector and IIT System Reform

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China Television Manufacture Demand Slump

A majority of China’s television manufacturers have released last year’s performance reports, which show a drop in sales. Internet electronics companies such as LeEco and Xiaomi have contributed to the decline in market demand for televisions produced by specialist manufacturers. Electronics manufacturer Konka’s 2015 financial report shows a 14.33 percent fall in its television sector, while TCL Corp, another home appliance manufacturer, did not achieve its 18 percent revenue growth goal last year. Analysts say that the industry might suffer consolidation sooner than expected.

China’s television equipment manufacturing industry generated over US$100 billion in 2015, up 9.3 percent on the previous year, compared to an annual 13.7 percent growth rate over the last five years.  The industry relies heavily on exports, and due to the changing export product structure and global recession, the industry has suffered volatile export growth.

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China Removes Parcel Tax for Cross Border e-Commerce Retail Imports

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By Dezan Shira & Associates
Editor: Jake Liddle

The China General Administration of Customs (CGAC) has recently decided to make adjustments to the classification table and tax tariff list of imported goods issued in 2012. Taking effect from April 8, 2016, the policy will cancel parcel tax for cross border e-commerce and has been implemented with an aim to level competition between online platforms and traditional brick and mortar import stores.

An adjusted parcel tax scheme now only applies to goods brought back into the country for personal-use by Chinese residents with a value exceeding RMB 5,000, and for non-residents’ personal-use goods with value exceeding RMB 2,000. Goods amounting to less than these amounts are tax exempt. The tax brackets have been reduced from four levels (10 percent, 20 percent, 30 percent, and 50 percent) to three. Below is a table detailing the new scheme:

parcel tax new

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China Outbound – 2016 Manufacturing Alternatives in ASEAN

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Our Latest Round-Up of Business News Affecting China-Based Businesses Investing in Asia

In this edition of China Outbound, we examine the opportunities in each of the ASEAN nations for developing part, or all of, a manufacturing and operational strategy outside of China. As increasing numbers of foreign investors find production in China becoming expensive with reduced margins and falling profits, and China’s own current foreign investment targets increasingly focusing on services rather than production, we look at ASEAN’s manufacturing options in country by country detail.

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Service Sector Dominates as FDI into China Continues to Rise in 2016

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Despite the slowdown in the Chinese economy, foreign investors are still continuing to pile money into the country. Foreign direct investment (FDI) into China grew steadily in January and February this year, rising 2.7 percent year on year to US$22.52 billion, according to the Ministry of Commerce. What has changed is a re-focusing of the worldwide services industry, where some 62.8 percent of all new FDI into China originates from. Of this, FDI in the high-tech service industry grew 157 percent year on year, with investors from the United Kingdom, the United States, the European Union and Japan all continuing to be buoyant.

“We are seeing some retrenchment by foreign-owned, China-based manufacturers to other parts of Asia, especially ASEAN,” says Chris Devonshire-Ellis, Chairman of Dezan Shira & Associates. “Wage and social security payments in China are high, especially when large workforces are required. These businesses are starting to move to lower cost destinations. But China’s overall FDI position shows that these industries are being replaced with new technologies and services, and this is the start of a new China boom in this area.”
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China Plugs Cross Border e-Commerce Import Tax Loophole

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cross border e-commerceBy Dezan Shira & Associates
Editor: Rainy Yao

For the first time in its history, the Chinese government released a circular (“Cai Guan Shui [2016] No.18”) to specifically clarify import tax policies for goods imported under the cross border e-Commerce model, regaining control of its loosely regulated cross border e-Commerce market. The Circular, which will come into force as of April 8, 2016, stipulates that consumers purchasing goods imported under both the direct shipping model and the bonded warehouse model need to pay import taxes including tariffs, import value-added tax (VAT), and consumer tax (if applicable).

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China Market Watch: China Factory Output and Steel Industry Overview

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China Factory Output and Non-manufacturing Figures Show Signs of Expansion

The National Bureau of Statistics reported growth of factory output last month, signs that policies aimed at instigating growth are coming into effect. Its official manufacturing purchasing manager’s index increased from 49.0 in February to 50.2 in March, the first time the figure has surpassed 50, or expansion, for eight months. The Caixin manufacturing PMI, a private indicator, also increased from 48.0 in February to 49.7 in March. It is said that March’s upturn has been affected by the boost in Chinese stock markets, stabilization of the Chinese Yuan following uncertainty at the beginning of the year, and the priority of growth stated at China’s annual legislative session where a higher target for deficit was set.

Growth has also been seen in the non-manufacturing sector. According to the National Statistics Bureau, China’s official non-manufacturing PMI, which covers retail, real estate, construction, aviation and software sectors, rose from 52.7 in February to 53.8 in March, clearly in expansion. In further detail, the services sub-index grew from 52.2 in February to 53.1 in March, and the sub-index for construction from 55.2 to 58.0.

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