Region

China Regional Focus: Investing in Zhejiang Province

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By Harry HandleyHangzhou bay bridge 300x250

As host of the 2016 G20 summit, Zhejiang province has been thrust into the global spotlight in recent months. The province of 55 million people is advantageously located on China’s east coast, south of Shanghai which is easily accessible via one of the world’s transoceanic bridges spanning the Hangzhou Bay. Zhejiang boasts advanced infrastructure, with 2,600 kilometers of railway, almost 120,000 kilometers of highway, and one of the top five busiest ports in the world. These factors, along with a rapidly developing business environment, have led Zhejiang to become one of the strongest and most diverse provincial economies in China.

A growing number of foreign firms are choosing Zhejiang as the location for their Chinese investments. The province offers great opportunities to potential China entrants, including a range of economic development zones. In order to take advantage of these opportunities, the economy of Zhejiang and recent foreign direct investment (FDI) trends must be understood.

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China Pivots to Delhi & Moscow as Silk Road Ambitions Take Hold

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CDE Op-Ed Commentary

With the new dynamics of a Trump-era Presidency upon us, the world’s Western media focus has been very much on the implications of this change of executive on global trade. However, American influence over global trade is becoming increasingly Spartan as the country concentrates on established orders at the expense of ignoring the new. With both Washington and Brussels focusing too much on the might of their respective economies, nuances and influence over what is developing elsewhere are being lost. While the US still soars away from its rivals as the world’s largest economy, an emerging picture tells of an Asia that is fast catching up with American and European fiscal might.

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Brexit Shows UK Has Turned its Trade Face Towards China, India & the East

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CDE Op-Ed Commentary

With the United Kingdom voting to leave the European Union (EU) bloc, current media is having a field day promoting either the dreadful fate that awaits the country or celebrations of its newfound ‘freedom’. Neither camp – in or out –  have yet provided a detailed breakdown of what can in fact be reasonably expected to happen. Yet having dealt for nearly 25 years with British investment in Asia – about 15 percent of our total clients at Dezan Shira & Associates have been from the UK, totaling an investment of about GBP200 million over that period – we have pedigree when it comes to assessing the mood for outbound and inbound investment coming from and into Britain.

First though, let’s examine the makeup of the EU, review its bilateral trade agreements, look at where some of the EU trade frustrations are, and the potential bilateral opportunities there for taking by the UK in light of the country leaving the EU.

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China Based Foreign Manufacturers – Finding “Beyond China” Investment Intelligence

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CDE Op-Ed Commentary

As China’s economy continues its path towards reform, the make up of its still-growing receipts of foreign investment dollars continue apace. China’s FDI increased by 4.7 percent in 2015, yet the form of investment is changing. A whopping 72 percent of the US$126.3 billion invested last year was in the services sector, as global businesses continue to invest to support the selling of goods and services to Chinese consumers.

This fits right in line with Chinese government policy – China wants and needs to attract dollars into services, and has said as much.  According to President Xi, “The economy has entered a new stage of slower but more resilient growth.” which Xi calls the new normal. “The essence of which is an improved economic structure that relies more on domestic consumption, the service sector and innovation.”

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Mossack Fonseca Leak Highlights Importance of Data Security and Client Protocols

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CDE Op-Ed Commentary

The so-called “Panama Papers” involving a huge leak of client information from the Panamanian Law Firm Mossack Fonseca highlights the absolute need for strong IT protection and security. Over 11 million documents were shared with a German newspaper, investigating the financial backgrounds of world leaders, in a haul larger than the documents released by Edward Snowden.

Thus far, the media has concentrated on world leaders and politicians, although the firm also has a significant presence in China. In fact, I was engaged at the practice in Hong Kong for a short while back in the early 1990s, assisting to process corporate documentation, mainly involving clients in the British Virgin Islands. Mossack Fonseca’s clients at the time were nearly all other Hong Kong based law and accounting firms, with only a handful of individuals. Most clients were using BVI companies to hold WFOE and similar investments into China, which was standard practice at the time given that China was still perceived as having some political and development risk in those days. Those that weren’t were simply using companies to own properties in Hong Kong, China, and elsewhere. All perfectly normal, standard procedures.

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China’s Human Capital Capabilities Being Overtaken by ASEAN

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CDE Op-Ed Commentary

The concept of Human Capital, defined as “the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country,” is an interesting decision making feature that is increasingly entering the corporate foreign investment mindset.

In short, it is an economic value of an employee’s skill set built on the production input of each employee, based on the assumption that all labor is equal. However, the concept of Human Capital also recognizes that not all human labor is equal and quality can be improved by investing in them. The education, abilities and experience of an employee has an economic value for the employer and the national economy as a whole.

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Meet Yong Bao, and His Impact on Child Product Sales to China

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yong bao 1Op/Ed by Chris Devonshire-Ellis

The news that the beloved children’s series “Thomas the Tank Engine” is to include new characters is an interesting aside to how MNC’s and marketing are reaching out to attract new customers. The series, originally a set of books written by the Reverend Wilbert Awdry for his young son Christopher in 1945, has subsequently developed over the years – including a successful BBC TV series voiced by Ringo Starr, and more recently by the Japanese voice actor Kumiko Higa. It is also a successful global franchise in the form of the “Thomas & Friends” TV franchise, which has been sold to over 121 countries in a business worth over US$1 billion.

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Dezan Shira’s 2016 Hong Kong Report – a Hub for the Maritime Silk Road

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CDE Op-Ed Commentary

I should begin this with a disclaimer – I am the Chairman of the firm that produced An Introduction to Doing Business in Hong Kong 2016. That said, I had nothing to do with its creation – the content has come purely from professionals within the firm’s Hong Kong office, and I hadn’t seen the text until very recently. What I will suggest, however, is that it makes for important reading when one considers the position the territory has found itself in as concerns mainland China.

While the report focuses on the foreign investment and tax aspects of doing business in Hong Kong – which frankly is what Dezan Shira & Associates does best and has done since 1992 – I have been a bit wary of the direction Hong Kong has been taking over the past few years. Its population doesn’t quite see eye to eye with Beijing, and calls from the CCP for Hong Kong residents to “love” China have been greeted in some quarters with a certain amount of ridicule. Hong Kong has recently been inundated with millions of mainland tourists, who while encouraged by the tourism and retail industries, have also stripped local supermarket shelves bare of hard to come by products in China – incidents of Hong Kong mothers not having baby milk to purchase in local shops due to mainlanders buying all imported products up created a barrier between local Hong Kongese and mainland Chinese. Beijing’s reaction to these tensions caused it to reference Hong Kong locals as ‘splittists’, while the local government wisely stepped away from that rhetoric and named such complainants as ‘localists’.  The upshot of all this is that, socially, Hong Kong’s citizens are not enjoying the best of relations with China right now. Understandably, it is this aspect that has garnered much media attention.

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