By Cory Lam and Vivian Ni
Sept. 1 – As regulations on representative offices tighten, the setting up of a foreign-invested commercial enterprise (FICE) is becoming an increasingly popular choice for foreign investors who want to engage in import and export, as well as domestic distribution activities in China. While it is critical for foreign investors to fully understand what they have to prepare exactly in order to successfully register a FICE with the related Chinese authorities, it is also equally important for most of them to apply for the general tax (value-added tax or VAT) payer status after the completion of FICE registration so they can realize genuinely cost-effective operations.
Why is VAT general taxpayer status important?
Article One of China’s “Interim VAT Regulations (State Council Decree No.538)” stipulates that all enterprises and individuals engaged in the sale of goods, provision of processing, repair and replacement services, and import of goods within China shall pay VAT, making VAT a matter of concern for most FICEs. Continue reading
By Nicholas Hughes
Jul. 15 – Among the permitted business activities a foreign-invested commercial enterprise (FICE) can conduct (besides retailing, wholesaling and commission agency activities) is franchising. The nature and use of franchising – and the business circumstances that affect it – have changed dramatically over the past three decades.
Franchising first emerged in China in the late 1980s. Today, despite a period of disordered development in its early years due to a loose legal environment and little local knowledge of franchising, China has the largest franchise market in the world.
In 2011, with the Chinese economy booming, franchising offers a low cost rapid growth model that provides easy access to the expanding consumer market and second-tier cities. Further, franchising enables faster brand recognition, drawing in consumers that see large brand name chains as being more reliable. Continue reading
Jul. 1 – The new issue of China Briefing magazine, titled Trading and Establishing Foreign-invested Commercial Enterprises in China, is out now.
While there has been a great deal of discussion about the macroeconomic trends surrounding and microeconomic thinking behind “the Chinese consumer” (and even whether this term is too generalized to use), the one word describing this demographic that all sources seem to agree on is potential.
It doesn’t take a PhD demographer or marketing guru to calculate that world’s largest population + rapidly rising disposable incomes + increasing tastes for foreign products = a rather enticing market for the foreign company. This little calculation is not new – though it is perhaps significantly more true now than several years ago – and it forms the central theme of hoards of business books and news articles. Continue reading
Apr. 22 – Our good friends at the China-based market research and consulting firm DDMA released a new report yesterday illustrating the growing popularity of shopping for drinks, snacks, grocery, and personal care items via online supermarkets. The study finds that the emerging trend is particularly prevalent among younger white collar workers and affluent individuals.
The study also evaluates the performance of the key online supermarkets in Shanghai, and identifies the key reasons consumers use online supermarkets, and the barriers to using them. Continue reading
By Vivian Ni
Mar. 2 – The famous United States-based consumer electronics retailer Best Buy announced on February 22, 2011 that it had decided to stop running its nine stores in China. The surprise announcement effectively signaled the end of Best Buy’s eight-year China story in which it spent three years preparing for its market entry and five years expanding itself to nine stores located in Shanghai, Beijing, Suzhou and Hangzhou. Continue reading
Feb. 24 – Our good friends at DDMA, a Shanghai-based market research firm, have released a report revealing that what Chinese people and companies say about products online is the number one influence on one-third of all retail sales in Shanghai – worth a total value of US$34 billion. The influence of online information on consumer purchases, the impact of “The Taobao Effect” and the huge potential of online shopping in China are all analyzed – while a discrepancy in terms of actual advertising budgets spent on online media was detailed. With some 6 percent of advertising budgets being spent on online media in China, this report highlights the need to re-think marketing communication strategies. Continue reading
Sept. 10 – The Ministry of Commerce amended the administration of foreign-invested internet sales enterprises last month, moving the approval and administration of such operations from the central government to the provincial governments.
Circular Shang Mo Zi  No. 272, issued August 19, states that applications for establishment of foreign-invested enterprises specializing in internet sales need to be submitted to the competent provincial commerce departments for approval. They will then conduct strict examinations and approval will be awarded in accordance with the “Measures for the Administration on Foreign Investment in Commercial Fields” and other relevant laws and regulations. The circular went into immediate effect. Continue reading
Op-Ed Commentary: Chris Devonshire-Ellis
Jul. 30 – As the central government encourages a re-balancing of the economy towards more domestic consumption, companies are finding subtleties of selling in China that will shape the way forward for foreign manufacturers doing business here. Gone are the days when a manufacturer would only sell within a region, now the focus is on getting goods to China’s massive rural population; some 900 million people, or three fourths of the total consumer market.
This means that long held wisdom in international and even China sales is being remodeled and, in some situations, rethought. Take Haier for example. Long China’s largest manufacturer of white goods – everything from washing machines to air conditioners to freezers and television sets – they are the archetypal white goods manufacturer. In a delicious twist of irony, they are finding that rural Chinese consumers prefer their products in a more auspicious shade of red. White is a color associated with death and funerals in Chinese culture. Superstitions die hard in the countryside, and red is considered a lucky color linked to fortune and wealth. Continue reading