North China

New Issue of Asia Briefing: An Introduction to Development Zones Across Asia

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Development-Zones-Across-Asia-cover-250May 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…

Beijing Details Foreigners’ Mandatory Social Insurance Participation

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Jan. 11 – Following the promulgation of a national decree ordering foreign employees’ mandatory participation in China’s social insurance system, Beijing recently issued its own implementation details in a bid to strengthen the enforcement of the new policy.

On December 20, 2011, the Beijing Social Insurance Fund Management Center (BSIFMC) released the “Circular on Issues Concerning the Improvement of Participation in Social Insurance by Foreigners Employed in Beijing (the new Circular).” The document details issues related to foreigners’ social insurance registration, backdated premium payments, charges of late fees, and the participation of foreigners from those countries that have signed a bilateral or multilateral agreement on social insurance with China. Continue reading…

Dalian Re-instates Caps on Social Insurance Contributions

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By Adam Livermore

Dec. 29 – On December 27 the Dalian Social Insurance Fund Management Centre released a document stating that the caps on contributions by employers to the various social insurance funds are to be re-instated (as they had been removed from September 2011) and that the previous method for the calculation of bases for contributions would also be re-adopted (this was also changed as of September 2011).

This is fantastic news for companies based in Dalian, who have been paying higher social insurance contributions on behalf of their high-earning employees compared to companies in other cities. From January 2012 the employer burden for each individual employee will again be limited to a maximum of RMB3,503 per month. Continue reading…

Has China’s Demographic Dividend Payout Ended?

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Op-Ed Commentary: Chris Devonshire-Ellis

Nov. 23 – This is Part II of my essay concerning the discussions and findings of the annual Economist China Summit which took place in Beijing last week, bringing together the cream of China-based businessmen, academics and analysts. Part I may be viewed here and Part III here.

In this discussion, dealing with China’s population and labor demographics, the panel consisted of KK Fung, managing director of Jones Lang LaSalle; Cai Fang, director of the Institute of Population at the Chinese Academy of Social Sciences; and Gordon Orr, chairman of McKinsey Asia. Continue reading…

The Economist Annual China Summit Summarized

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The Chinese Century – Promises, Pitfalls and Presumptions

Op-Ed Commentary: Chris Devonshire-Ellis

Nov. 21 – The Economist Newspaper’s annual China summit took place in Beijing last Friday, with some 300 senior executives from many of China’s MNCs in attendance, together with political and academic leaders. With this year’s theme being “Promises, Pitfalls and Presumptions,” the event promised to provoke some controversy, and in true Economist style, this was very much the case with healthy debate on all sides and some excellent speakers and panelists – not least including Gary Locke, the new U.S. Ambassador to China.

I break the event down into its component parts in order for our readers to follow what went on. The conclusions given are mine alone. Continue reading…

Foreign Schoolkids Targeted By China Kidnappers

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Nov. 2 – Foreign schoolchildren are the potential new targets in child kidnapping cases following an incident at one of Beijing’s luxury compounds this past weekend. On Saturday afternoon at approximately 4:30 p.m., the student was outside the side exit of the Yosemite Villa Estate and a man, unknown to her, came towards her and gave her a hug. She pushed him away but he then attempted to lift her up and drag her into his car. Fortunately a guard and a taxi driver stepped forward to help her and she safely returned home. The incident has been reported to the police for further investigation. Continue reading…

Cap on Employer Portion of Welfare Contributions May Be Removed

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China labor costs possibly set for dramatic increases

Op-ed Commentary: Adam Livermore

Oct. 19 – The cap on the amounts paid as contributions to social welfare funds by employers on behalf of their workforce may be removed, if recent policies enacted in Dalian are to be implemented nationally.

The Dalian ceiling, which we covered in some detail here, was previously capped at a total monthly salary amount of RMB11,154. This meant that regardless of salary paid to an employee over and above this amount, the calculation for the contribution to be made by the employer was based on this RMB11,154 figure – therefore effectively the maximum contribution per employee was RMB3,491 per month. This cap has now been temporarily removed and, subject to local government findings, if successful in raising welfare fund reserves in Dalian this policy may be rolled out on a national basis. If so, the costs of employing high-earning staff will dramatically increase in proportion to their salary. Continue reading…

Added Employee Costs to Hurt Dalian-Based Companies

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By Adam Livermore

Oct. 3 – A couple of weeks ago we reported some details of the recent announcement by the Dalian Social Insurance Bureau concerning changes to the calculation base for contributions by employers. We summarize the most important points here:

  1. The basis for calculation of the company contribution will be the total previous month’s salary paid to employees in the company.
  2. The ceiling amount for the calculation that was previously imposed (and is currently in place in all other cities in China) has been temporarily removed. This ceiling amount was RMB11,154.
  3. The company should include the salaries paid to foreign employees (including those from Hong Kong, Macau and Taiwan) into the declaration of “total previous month’s salary), effectively requiring the company to make social insurance contributions on behalf of their foreign staff as well as mainland Chinese staff. Continue reading…

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