Sept. 30 – WFOEs are considered resident enterprises in China and, just as other domestic companies, their profits are subject to corporate income tax (CIT), which is generally 25 percent. Businesses generally also pay either business tax (BT) or value-added tax (VAT), depending on the nature of the business. Only in special circumstances are both taxes paid. BT is imposed on the provision of taxable services and sale of immovable property and intangible assets. Meanwhile, VAT is levied on the on the sale of goods, provision of repair and replacement services, and importation of goods into China. BT ranges from 3 percent to 20 percent, while VAT ranges from 0 percent to 17 percent. For both BT and VAT, certain exemptions apply. Continue reading
By Eunice Ku
Sept. 11 – A wholly foreign-owned enterprise (WFOE) is a company established in China according to Chinese laws and wholly owned by one or more foreign investors. A WFOE is a limited liability company, meaning that the liability of the shareholders is limited to the assets they brought to the business. Unlike the simpler representative office setup which is subject to a number of limitations, a WFOE can make profits and issue local invoices in RMB to its customers, which is crucial as invoices are the basis for obtaining tax deductions in China. Compared to a joint venture, a WFOE has greater freedom and independence, and can better protect its intellectual properties. It can also employ local staff directly, without obligation to employ services from employment agencies. Although there is no legal restriction on the number of foreigners a WFOE can employ, in practice the number of foreign employees does depend on the amount of registered capital (discussed below) that the respective company injects. Continue reading
Indian buyers of U.S. parent “not welcome” as Shandong labor union disrupts China operations
Sept. 2 – The increasing number of problematic issues facing foreign investors in China has been brought to the fore once again, this time highlighted by a disgruntled labor union. The Shandong-based Cooper Tires plant, a joint venture with local partner Chengshan Group, has been the focal point of a proposed US$2.5 billion takeover of Ohio-based Cooper Tire & Rubber Company by a subsidiary of Indian tire manufacturer Apollo Tires. Cooper owns 65 percent of the Shandong-based joint venture, and have accepted the total takeover of their complete global operations by Apollo. The deal itself would be the largest Indian takeover of an American company. Continue reading
Jun. 3 – The new issue of China Briefing Magazine, titled Sourcing from China, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the month of June.
While the United States and Europe continue to lead in the production of top-end manufacturing and smart technologies, China is slowly but surely climbing the technology ladder, and is actively trying to raise the human capital and managerial skills needed to lead such growth. Meanwhile, China continues to outpace competitors in the mass production of those basic, low value-added products necessary in the daily lives of people around the world. It has also managed to develop a fast and efficient national network of roads, railways, ports and airports coupled with a first-tier integrated logistics system. On top of these structural accomplishments, China has created a skilled workforce capable of producing anything an engineer can design, and a comprehensive supply chain that sources energy and raw materials from around the globe. Continue reading
Posted in Business, Central China, East China, FDI and Foreign Trade, Featured, Legal and Regulatory, Manufacturing, Markets, Northeast China, Shipping & Logistics, South China, Textiles, West China
By Christian Fleming and Shirley Zhang
May 28 – Development zones are not a Chinese creation, but China in particular has found tremendous success with this economic tool. Historically, the liberal business environment in these areas have allowed foreign enterprises to operate more comfortably in the Chinese business environment, sheltered from the bureaucracy and red tape that often characterizes the rest of the country while at the same time such businesses could benefit from preferential policies, greater resource availability, and prime locations within regional hubs of creativity and innovation. Continue reading
Posted in Automotive, Business, Central China, Chemical & Pharmaceutical, East China, Economy and Politics, FDI and Foreign Trade, Featured, Manufacturing, Markets, Northeast China, Shipping & Logistics, South China, Technology, West China
May 10 – The new issue of Asia Briefing Magazine, titled An Introduction to Development Zones Across Asia, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the months of May and June.
The use of development zones in their different guises has been an effective model essentially brought to prominence by China over the past 25 years to help both foreign investors and domestic companies meet in a relationship that provides tax advantages to both. Development zones typically permit the foreign investor to bring component parts into a country for assembly without having to pay import duties. Investors may then add in locally-sourced components, assemble the final product, and warehouse it all duty free before then having the option of exporting the finished product (collecting some VAT rebates on the locally sourced portion) or entering the domestic market with a product assembled at local labor costs. Continue reading
This is the second article in a series dedicated to comparing the costs and ease of doing business in Vietnam and China from the standpoint of a foreign investor.
By Rosario Di Maggio
Jan. 21 – Many foreign investors operating in China today are looking at Vietnam as a sort of additional “province” or alternative hub to integrate into their current Chinese or Asian supply chain. This is particularly true in sectors where China and Vietnam often compete, such as leather goods, shoes, textiles, furniture and light electronics. This list is set to expand as Vietnam is upgrading its industrial base to high-end and high-tech manufacturing investments. Small-sized companies, however, are often discouraged by the idea that expanding into another country would mean massively increasing overheads or that the returns would not be worthwhile when considering the initial investment.
After comparing the costs of registering and maintaining representative offices in the first article, this piece now looks at the current regulations on corporate income tax as they apply to foreign investors to check whether Vietnam offers any additional advantages over its neighboring country to the north. Continue reading
Jan. 17 – The Shenzhen government has issued a 9 percent GDP growth rate target for 2013, down from the 10 percent achieved last year and against a background of the city mayor, Xu Qin, stating that “double digit growth rates are in the past.” The 2012 growth was the lowest since the city became a special economic zone in 1979. Between 1980 and 2006, Shenzhen achieved annual growth rates averaging 27 percent. Continue reading