Legal & Regulatory
By Dezan Shira & Associates
Editor: Zolzaya Erdenebileg
Free trade zones (FTZs) are a specific type of special economic zone (SEZ) where goods can be imported, handled, manufactured, and exported without direct intervention from Customs. They play an important role in modernizing China’s business landscape and serve as areas where authorities can experiment with pro-business regulations.
Currently, there are 11 FTZs in China; seven planned FTZs were announced in August 2016. Each FTZ has an industry focus and matching incentives to attract investment. FTZs are of critical consideration for foreign firms, but this decision process is highly dependent on an investor’s business focus and growth prospectus.
The latest issue of China Briefing Magazine, titled “China’s Investment Landscape: Finding New Opportunities“, is out now and currently available to subscribers as a complimentary download in the Asia Briefing Publication Store.
In this issue:
- The New Investment Catalogue and Negative List
- Investing in Free Trade Zones
- The Business Reform Agenda
By Alexander Chipman Koty
A company in northwest China that has gained notoriety for its verbose name – ‘There Is a Group of Young People With Dreams, Who Believe They Can Make the Wonders of Life Under the Leadership of Uncle Niu Internet Technology Co. Ltd.’ – will have to change its name in the wake of new company naming regulations.
The Rules for the Prohibition and Restriction of Enterprise Names, released by China’s State Administration for Industry and Commerce (SAIC), ban businesses from registering company names authorities consider “weird”, overly long, politically sensitive, or mimicking existing brands. Businesses already registered with names authorities deem inappropriate may be compelled to alter them. The new rules came into effect on July 31, 2017.
By Vasundhara Rastogi
Americans are feeling less optimistic about doing business in China.
In its latest survey, the American Chamber of Commerce in China found that more than three-quarters of US-based companies expressed doubts about investing in China, while over 45 percent of those already in the country stated that their revenues were dropping.
China’s economic growth has slowed down since 2012. Its gross domestic product rose only 6.7 percent in 2016, registering its slowest pace of expansion in two decades.
Apart from sluggish growth, China’s challenging regulatory environment and fierce market competition makes doing business much harder for foreign companies in the country.
Yet, two global fast-food giants – McDonald’s and Starbucks – continue to expand their operations in China. In this article, we discuss how the two companies have pursued and expanded their operations, and why China is still seen as a valuable market.
By Gidon Gautel
Companies in China with soon-to-be outdated certification would be wise to put the Five-in-One business license amendment on their upcoming agenda.
China’s Five-in-One system combines a business’ tax registration certificate, organization code, business license, social security registration certificate, and statistical registration certificate into a single document with one social credit code. This has made setting up a business in China faster and easier for foreign investors.
Businesses without an integrated business license under the Three-in-One or Five-in-One system should now upgrade. The deadline for converting to Five-in-One certification is December 31, 2017. Beyond this date, all five certificates held by the company, now encompassed by the Five-in-One system, will be deemed as invalid and cancelled.
By John Niggl, Client Manager for InTouch Manufacturing Services
This is Part 2 of a two-part article about quality control inspections in China. In Part 1, we discussed how corruption typically appears in the quality control process, and some specific problems it may cause.
Confronting the possibility of integrity risks during your product’s quality control (QC) inspection process in China can be a challenge, especially when doing so from halfway around the world. But there are some actionable steps you and your QC partner can take now that will help you to minimize your risk.
Telecoms service providers told to block individuals’ access to VPNs
China’s central government has given directives to the country’s three largest telecommunications providers, namely China Telecom, China Unicom, and China Mobile, to block individuals’ access to virtual private networks (VPNs) by February 1, 2018.
Previously, China’s ‘Great Firewall’, the government’s tool to enforce ‘internet sovereignty’, has hindered access to VPNs, but did not make access impossible. While there have been government drives in many forms to crack down on VPN usage and further censorship in the past, few have come to any real result.
However, the latest directive has been a serious concern for internet users. On June 22, VPN service provider Green announced that it would stop operations on July 1, while many other services have disappeared from app stores all together.
Businesses depending on VPNs for operation will also be affected, but may be able to lease lines to access international internet, meaning that the move primarily affects individuals. So far, government authorities have not released any official statements on the matter.
By John Niggl, Client Manager for InTouch Manufacturing Services
This is Part 1 of a two-part article about quality control inspections in China. In Part 2, we discuss steps to prevent corruption in your quality control inspection process.
Transparency International’s latest Corruption Perception Index places most countries in the Asia Pacific region in the bottom half of their world ranking. And given the prevalence of contract manufacturing in countries like China, India, and Vietnam — all of which scored 40 or less out of a possible 100 points — these results continue to give importers cause for concern.
If you’re like most importers, your supply chain probably contains tens, if not hundreds, of different suppliers, though you may have only directly contacted a few. And even if you’re careful to conduct quality control inspection at various stages of production, you may still be vulnerable to corruption and its consequences.
In fact, high integrity is one of the traits importers most often seek in a quality control (QC) inspector, whether hiring their own staff or an independent inspection firm. But even despite your best efforts at due diligence, corruption can still impact your inspections. Results can vary from receiving defective or otherwise unsellable goods, to losing valued customers and distribution channels when retailers refuse to stock your products.